Russel Metals Finalizes $102M Deal, Deepening U.S. Market Presence

TORONTO, ON – January 02, 2026 – Russel Metals Inc. (TSX: RUS) has officially completed its acquisition of seven U.S. metals service centers from Kloeckner Metals Corporation, a strategic transaction valued at US$102 million. The deal, which closed today, significantly expands the Canadian company's operational footprint in key American markets and signals a determined push to bolster its value-added processing services.

The newly acquired facilities are located in Dubuque, Iowa; Charlotte, North Carolina; Suwanee, Georgia; Houston and Austin, Texas; and Jacksonville and Pompano Beach, Florida. These centers, along with approximately 350 employees, now join the Russel Metals network, one of the largest metals distribution companies in North America.

"We look forward to expanding our US footprint in key geographic areas," commented John Reid, President and CEO of Russel Metals. "We welcome the Kloeckner employees to the Russel family."

This move is more than a simple expansion; it represents a calculated step in a broader corporate strategy to capture a larger share of the lucrative and dynamic U.S. market, shifting the company's operational center of gravity southward.

A Strategic Push for U.S. Growth

The acquisition is a cornerstone of Russel Metals' long-term plan to enhance its geographic diversification and service capabilities. Company leadership has been vocal about its goal to increase its revenue base from the United States to over 50% of its total, a substantial increase from 39% in 2024 and just 30% in 2019. This transaction is a major catalyst toward achieving that objective.

The deal is not just about adding locations to a map. It is intrinsically linked to the company's growing emphasis on value-added processing—services like cutting, shaping, and finishing metals to customer specifications. These services are crucial for improving profit margins and building stronger customer relationships in a competitive industry. Russel Metals has indicated its intention to invest in modernizing the newly acquired facilities and equipping them with advanced value-added equipment over the next two to three years. This initiative aligns with the company's ambition for value-added products to eventually constitute half of its total revenue.

By integrating these seven centers, Russel Metals also expects to realize significant operational synergies. An expanded network strengthens its procurement power, allowing for more favorable terms with suppliers, and enables more efficient inventory management across a wider geographical area. The integration of Kloeckner's experienced workforce is also seen as a key asset in ensuring a smooth transition and maintaining service continuity for existing customers.

High-Performing Assets in Key Regions

The seven service centers are not just dots on a map; they are established, high-performing assets in strategically vital economic regions. For the period spanning from early 2023 to mid-2025, these facilities collectively generated average annual revenues of approximately US$500 million and an average annual adjusted EBITDA of around US$20 million. This demonstrates their capacity to deliver an immediate and substantial contribution to Russel Metals' top and bottom lines.

The geographic positioning of the centers is particularly notable. The locations in Houston and Austin plant Russel Metals' flag firmly in Texas's bustling energy and manufacturing corridors. The Charlotte center provides a crucial foothold in a major logistics and industrial hub of the Southeast, while the facilities in Georgia and Florida tap into one of the fastest-growing regions in the country. The Dubuque, Iowa, location further strengthens its presence in the American Midwest.

This expansion is set to intensify competition in these regional markets. As one of the top five metals distributors in North America, Russel Metals is leveraging this acquisition to achieve the critical mass needed to challenge established players and increase its market share. The planned investments in value-added services will further enhance its competitive edge, allowing it to cater to a more diverse range of customer needs across sectors like construction, energy, and general manufacturing.

Financial Footing and Industry Context

The US$102 million acquisition was financed through Russel Metals' existing cash reserves or its credit facility, reflecting the company's strong financial position. Despite some mixed quarterly results in 2025, where revenues occasionally missed forecasts, the company has demonstrated robust underlying financial health. It generated $344 million in cash flow from operations in 2024 and maintained significant liquidity, reporting $566 million as of mid-2025.

Market analysts have largely viewed the strategic move with optimism. Prior to the closing, analyst ratings for Russel Metals' stock (TSE:RUS) were generally positive, with one recent report issuing a "Buy" rating and a C$46.00 price target. The consensus points toward stable demand and potential margin expansion in the coming year, with forecasts for growth in both earnings per share and revenue for fiscal years 2025 and 2026, which this acquisition is expected to bolster.

This transaction also sheds light on the strategic realignment happening across the industry. Kloeckner's decision to divest these centers is part of its parent company's stated strategy to pivot away from traditional commodity distribution and concentrate on higher-margin, specialized businesses. This reflects a broader industry trend where major players are seeking to differentiate themselves through service and specialization rather than volume alone.

Indeed, the North American metals distribution sector is in the midst of a consolidation wave. The number of individual establishments has been slowly contracting as larger companies like Russel Metals and its competitors, such as Reliance Steel & Aluminum, use strategic acquisitions to expand their reach and product portfolios. This trend, coupled with the reshoring of manufacturing and a renewed focus on supply chain reliability, creates a favorable environment for large, well-capitalized domestic distributors. While the market for metals remains subject to price volatility, this acquisition positions Russel Metals to navigate the challenges and capitalize on the opportunities of a changing industrial landscape.