A. M. Castle acquires Tube Supply
Oak Brook-based A. M. Castle & Co., said it will acquire Houston-based Tube Supply Inc., a distributor of specialty tubular and bar products for the oil and gas industry.
The purchase price of $165 million is subject to customary adjustments at closing and the acquisition is expected to be immediately accretive to A. M. Castle's earnings, the company said in a statement. A. M. Castle expects to close the transaction by the end of the first quarter of 2012, subject to customary closing conditions and regulatory approvals.
Tube Supply has provided high quality products and services primarily to the North American oil field equipment manufacturing industry for the past 25 years. Tube Supply has the reputation of being a world-class provider of a broad range of oil field quality metals with a specific focus on the equipment and tools used in downhole completion and wellhead applications.
The company had unaudited revenues of approximately $208 million for the twelve-month period ending Oct. 31. It operates service centers in Houston, Texas and Edmonton, Alberta and has recently completed construction of a new, 250,000 square foot facility located at its Houston headquarters.
Tube Supply's management team will remain in place and the combination of the two businesses will be led by Nick Jones, president of A. M. Castle's Oil & Gas Commercial Unit which is also headquartered in Houston.
“We are extremely excited to add such a high quality company, experienced management team and dedicated employees to the A. M. Castle family,” said Michael Goldberg, president and CEO of A. M. Castle & Co. “Tube Supply is a strong complement to our existing oil and gas business, and our presence in the oil and gas industry will nearly triple with this acquisition.
“Tube Supply has a solid track record in the oil and gas market and we anticipate further growth through expanded product offerings to both Tube Supply's and A. M. Castle's customers. This partnership is a great long-term strategic fit that will allow us to capitalize on the growing demand and exciting opportunities we see in this sector. We believe that the combination of A. M. Castle and Tube Supply will add value for our shareholders, customers and employees,” Goldberg added.
Jefferies & Company, Inc. served as financial adviser to A. M. Castle. In addition, Jefferies Group, Inc. and its affiliates have provided A. M. Castle with a firm commitment for financing of up to $375 million. A. M. Castle & Co. plans to refinance its existing outstanding debt in conjunction with closing the acquisition of Tube Supply.
Tube Supply has been advised by Duff & Phelps.