Merger and acquisition (M&A) activity continues to be a major theme in the metals sector. This is especially true for service centres ― the primary purchasers of metal from steel and aluminum mills ― where shifting industry dynamics are blurring the lines in the supply chain. Suppliers are consolidating. Large mills are now selling directly to large end-users and forcing larger service centres to pursue business from smaller end-users, placing pressure on mid-market service centres.

At the same time, the credit environment has tightened considerably as private equity investors and lenders are reluctant to participate in M&A deals and are instead choosing to wait out the sub-prime mortgage malaise.

Without the presence of private equity, competition among buyers has diminished and valuations have dropped correspondingly. That said, valuations remain above historical averages and are attractive to buyers and sellers alike.

In the article, “Service Center Mergers Roll On,” John Jazwinski, national leader for primary metals in Deloitte’s Financial Advisory practice, examines these conditions and explains their importance to managers plotting their near-term growth strategies

 Read Service Center Mergers Roll On, originally published in Metal Center News, January 2008 (posted with permission).

 Read the January 2007 article, Conditions Ideal for Service Center Mergers and Acquisitions (with permission from Metal Center News).