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Reliance Acquires Airport Metals

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Reliance Steel & Aluminum Co.’s (RS - Free Report) newly-constituted subsidiary, Bralco Metals (Australia) Pty Ltd., has purchased the assets of Melbourne-based Airport Metals (Australia) Pty Ltd, a subsidiary of Samuel Son & Co., Limited. According to the company, Bralco has acquired almost all the assets of Airport Metals, which is a stocking distributor of aircraft materials and supplies. The terms of the deal were not disclosed.

The acquisition marks the first foray of Reliance Steel into the Australian market. Bralco Metals presently services aircrafts and other customers from the U.S. Hence, with the acquisition of Airport Metals, Bralco will now have a physical presence in Australia.

For more than four decades, Airport Metals has been a leading distributor of aircraft supplies in Oceania. Thus, with the addition of Airport Metals, Reliance has now further expanded its global network. The company recently acquired the assets of the Worthington Steel Vonore plant from Worthington Industries Inc. (WOR - Free Report) to strengthen its presence in the Southeastern region of the U.S.

These moves are in sync with Reliance’s philosophy of growing inorganically. The strategic acquisitions are expected to drive growth moving forward through improved product offerings and expansion into new markets.

Reliance is also focused on growing its business organically. It has shut down few small operations, opened new facilities and expanded the existing ones. The majority of Reliance’s stipulated capital expenditure for this year will be spent on expanding its facilities and improving its geographic footprint. The company expects these measures to bear fruit in the long run.

We currently have a long-term Outperform recommendation on Reliance Steel. The company, which competes with Metals USA Holdings Corp. (MUSA - Free Report) and Worthington Industries Inc., retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.

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