Sims to acquire Baltimore Scrap

The Sims Metal business unit of Australia-based global recycling company Sims Ltd. has agreed to acquire the assets of United States-based Baltimore Scrap Corp. (BSC) and its affiliated entities.

BSC is a large Mid-Atlantic metal recycler, with 17 facilities in five states—Maryland, Virginia, Pennsylvania, New York and New Jersey—with four of those facilities home to auto shredding plants, and handles and sells approximately 600,000 metric tons of scrap each year.

Sims says BCS’ yards have access to “extensive rail, barge and port infrastructure, and the business is well-positioned with attractive proximity to both growing domestic demand markets and export [markets].”

The company says the acquisition is anticipated to close in October subject to the satisfaction, or waiver, of customary closing conditions, including required regulatory approvals.

“Baltimore Scrap Corp. is a company we have admired for many years,” says Alistair Field, CEO and managing director of Sims Ltd. “They have a strong management team who has built an excellent business over many years.

“This acquisition is a highly complementary fit with our strategy to expand the metal recycling business in North America and increase our diversity of sales channels to growing U.S. domestic demand for ferrous and nonferrous scrap metal," he continues. "I welcome the Baltimore Scrap Corp team and their group of affiliates to the Sims family.”

Following on the heels of Sims’ 2021 acquisition of the former Atlantic Recycling Group, based in Maryland, and the purchase of Philadelphia-based Northeast Metal Traders this year, the transaction could face questions concerning the concentration of so many Mid-Atlantic metal recycling facilities in the hands of one operator.

Remaining competitors in the region include the Maryland, New Jersey and Pennsylvania operations, including auto shredding capacity, of United Kingdom-based EMR Ltd. and a handful of independent operators, such as the Mazza Iron & Steel shredder in Fairless Hills, Pennsylvania.

As currently proposed, Sims is making the acquisition for $177 million plus working capital and other adjustments to be determined at closing.

The global company says the transaction implies an enterprise value/earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of 5.4 on a three-year trailing average, and on an equivalent postsynergies basis, the EV/EBITDA multiple is forecasted to reduce to 4.2.

“The BSC acquisition is another example of our capital recycling strategy," Sims Chief Financial Officer Stephen Mikkelsen says. "We anticipate the acquisition to be substantially funded through the redeployment of proceeds from noncore asset sales and other assets that are not likely to achieve their required rate of return.”