US steel giant Nucor Corporation has signed a definitive purchase agreement to acquire Cornerstone Building Brands' insulated metal panels (IMP) business for a cash purchase price of $1 billion – or approximately 10x pre-pandemic EBITDA inclusive of expected synergies. Adjusting for the net present value of associated tax benefits, the realized effective purchase price for Nucor is approximately $900 million.
Leon Topalian, president and CEO of Nucor, said that the announcement accelerates the company's vision to broaden value-added solutions for its targeted end markets. "We are excited about this opportunity to acquire a historical leader and innovator in the quickly growing IMP product category serving the non-residential market. We are committed to finding new and better ways to meet our customers' needs, and this acquisition is an excellent fit with Nucor's long-term strategy to grow our core business and expand our product portfolio."
"We are excited about this opportunity to acquire a historical leader and innovator in the quickly growing IMP product category serving the non-residential market. "Leon Topalian, president and CEO, Nucor Corporation.
According to Nucor, IMP products are wall and roof panel solutions comprised of an energy-efficient foam core sandwiched between two layers of steel or aluminium and are available in a variety of widths, thicknesses and exterior finishes.
The IMP business Nucor is acquiring from Cornerstone Building Brands has seven manufacturing facilities located throughout North America. These locations complement the footprint of Nucor Buildings Group, as well as the company's existing IMP business, TrueCore. With this acquisition, Nucor will be purchasing two valued legacy brands, CENTRIA and Metl-Span, which provide a full range of products to service high-end architectural applications to more functional and quickly expanding cold storage and warehousing uses.
Nucor claims that the superior insulation performance of IMP products reduces energy usage and overall operations-related GHG emissions. Additionally, IMP products are said to be easier to install with lower maintenance costs versus other insulation solutions.
Demand for IMP products is expected to build at double digit annual growth rates through this decade and is being driven by evolving consumer preferences regarding e-commerce and grocery delivery, as well as the expansion of data centres and server farms which all require temperature-controlled climates.
"I look forward to enthusiastically welcoming our new teammates from Cornerstone Building Brands to the Nucor family. Adding this business to Nucor Buildings Group will allow us to build upon our recent success with TrueCore,"Jeff Carmean, president, Nucor Buildings Group.
According to Carmean, the acquisition will accelerate the growth plans of Nucor Insulated Panel Group and enable the company to offer its customers a full suite of solutions.
Moelis & Company LLC served as the exclusive financial advisor and Moore & Van Allen PLLC served as legal counsel to Nucor Corporation for this transaction, which is expected to close later this year, pending regulatory approvals.