BlueScope expands in US with coatings business buy

Australian steelmaker BlueScope has expanded its United States business footprint, agreeing to buy the steel coil coatings business of Cornerstone Building Brands Inc for US$500 million.

Coil Coatings is the second largest metal painter in the US, with a total capacity of around 900,000 tonnes per annum across seven facilities, predominantly serving commercial and industrial construction applications.

BlueScope managing director and CEO Mark Vassella said: “The acquisition of Coil Coatings is a significant step forward in our growth plans for North America.

“It almost triples our US metallic coating and painting capacity to over 1.3 million metric tonnes per annum, from around 475,000 tonnes per annum at present, and gives us immediate and direct access to the large and growing Eastern US region.

BlueScope’s investment in North America now totals over A$4.5 billion, employing more than 4,000 employees.

The company paid US$770 million to expand North Star, US$220 million to establish of BlueScope Recycling as well as smaller investments in the BlueScope Properties Group,

Vasella said: “As a global leader in painted steel products for building and construction applications, this deal hits our sweet spot.

“The Coil Coatings business complements our existing North American asset base on the West Coast (through the NS BlueScope Coated Products Joint Venture).

“We had previously flagged interest in expanding painting operations into the Eastern US region via a greenfield paint line.

“Today’s acquisition provides BlueScope with a rare opportunity to immediately fulfil this strategic growth initiative with Coil Coatings’ outstanding portfolio of assets.

Vasella said the Coil Coatings business provided BlueScope with a significant opportunity for long-term earnings and growth through product development and branded products

BlueScope has identified operational and supply chain synergies of around US$12 million per annum by year three.

The purchase price of US$500 million represents approximately 8.9 times CY2021 pro-forma EBITDA of US$56 millions.

The acquisition will be fully funded from cash.

Picture: Cornerstone Building Brands

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