Russel Metals Inc., making another move to strengthen its position in the energy sector in Western Canada and the U.S. Southwest, will purchase Apex Distribution Inc., a Calgary-based oilfield supply company.
The metals distribution and processing company will pick up a privately held enterprise that generated revenue of about $500-million in 2011 and posted earnings before interest and taxes of about $42-million.
The price of the purchase was not disclosed, but Russel said it will pay for the acquisition from its cash holdings, which stood at $272-million at the end of the second quarter after an issue of $300-million of notes earlier this year.
It’s the third acquisition in Western Canada Russel has made this year as it expands in some of the fastest-growing segments of the Canadian economy.
“The addition of Apex Distribution would complement our existing energy tubular products segment and will provide a new channel of distribution into the Western Canadian oil and gas industry along with immediate growth opportunities in the U.S. market through Apex-Remington,” said Brian Hedges, Russel’s chief executive officer.
Apex-Remington is based in Tulsa, Okla., and operates mainly in the U.S. oil patch.
The acquisitions of Siemens Laserworks and Alberta Industrial Metals in May added service centre facilities in Red Deer, Alta., Edmonton and Saskatoon to Russel’s existing energy operations in Alberta and the U.S. market.
“We want to be in the energy sector,” Mr. Hedges said. “We want to mute the volatility as much as we can.”
Apex posted profits in 2008 and 2009 despite the recession, he added.
The Russel purchase of Apex Distribution is the second major deal in the oilfield supply business this year. Houston-based National Oilwell Varco Inc. purchased Calgary-based CE Franklin Ltd. earlier this year for $240-million.
Russel’s energy business is the company’s second-largest segment after its metals service centre operations and the energy division’s share of Russel’s revenues grew during the second quarter.
Revenue from energy-related businesses rose 32 per cent to $192-million from the same period a year earlier. Revenue from its service centre operations rose 11 per cent to $432.2-million.
Mississauga-based Russel posted revenues of $2.7-billion overall in 2011.