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Worthington Industries: Growth Via Mergers and Acquisitions

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Mergers and acquisitions

Previously in this series, we reviewed the three business segments at Worthington Industries (WOR).

Mergers and acquisitions are an integral part of Worthington’s growth strategy. It has acquired 18 companies since 2009. In fiscal year 2014, $800 million of Worthington’s revenues and $85 million of its earnings came from these acquisitions.

Reliance Steel & Aluminum (RS) has also grown through acquisitions. It currently forms 4% of the SPDR S&P Metals and Mining ETF (XME). U.S. Steel (X) and Carpenter Technology (CRS) each form ~3.3% of XME.

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Major acquisitions

The above chart shows the major acquisitions that Worthington has completed. Recently, it acquired Rome Strip Steel Company, which manufactures cold rolled steel of extremely tight tolerances. The automobile sector is this company’s biggest customer. With this acquisition, Worthington now has three value-added cold rolling facilities. This business will be integrated into its Steel segment.

James Russell Engineering

In 2014, Worthington acquired James Russell Engineering, based in Boston. James Russell Engineering manufactures aluminum and stainless steel transport trailers. These trailers are used for hauling nitrogen, hydrogen, and liquefied natural gas. This business is now part of Worthington’s Pressure Cylinders segment.

Also in 2014, Worthington acquired Midstream Equipment Fabrication for $40 million. Midstream Equipment Fabrication supplies high-pressure separators to energy companies drilling in the Eagle Ford Shale.

As well, it acquired the tank manufacturing division of Steffes Corporation. The business generated revenues of $25 million in 2013. Both of these acquisitions are now consolidated under Worthington’s Pressure Cylinder segment.

Worthington has also entered into several joint ventures over the last few years, which we’ll discuss next.

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