Acquisition - United Steel Supply

9 Months Ended

Sep. 30, 2019

Acquisition - United Steel Supply

Acquisition - United Steel Supply

Note 2. Acquisition – United Steel Supply, LLC

On March 1, 2019, the company purchased 75% of the equity interest of United Steel Supply, LLC (USS) for cash consideration of $93.4 million, plus a customary working capital transaction purchase price adjustment of $3.7 million in September 2019. Additionally, the company has an option to purchase, and the sellers have the option to require the company to purchase, the remaining 25% equity interest of USS in the future. Headquartered in Austin, Texas, USS is a leading distributor of painted Galvalume^® flat roll steel used for roofing and siding applications, with distribution centers strategically located in Mississippi, Indiana, Arkansas, and Oregon. USS provides the company a new, complementary distribution channel and connects it to a rapidly growing industry segment with customers that do not traditionally purchase steel directly from a steel producer. USS’s operating results from and after March 1, 2019, are reflected in the company’s financial statements in the steel operations reporting segment.

Note 2. Acquisition – United Steel Supply, LLC (Continued)

The aggregate purchase price was preliminarily allocated to the opening balance sheet of USS as of March 1, 2019, and updated in September 2019 upon the final working capital adjustment, as presented below. The following allocation of the purchase price (in thousands) is preliminary based on the information available to estimate the fair value of assets acquired and liabilities assumed. The accounting for the acquisition has not yet been completed because the company has not finalized the valuations of identifiable intangible assets, if any, and thus goodwill. The company anticipates finalizing the valuation of identifiable intangible assets by December 31, 2019.

		September 30,
		2019 Allocation		Adjustments		Initial Allocation
Current assets, net of cash acquired	$	86,236	$	(7,784)	$	94,020
Property, plant & equipment		7,388		-		7,388
Intangible assets and goodwill		113,810		11,892		101,918
Total assets acquired		207,434		4,108		203,326
Liabilities assumed		77,954		(3,270)		81,224
Redeemable noncontrolling interest		32,374		3,684		28,690
Net cash consideration	$	97,106	$	3,694	$	93,412