Hill & Smith PLC (LON:HILS), the international provider of sustainable infrastructure products and services, has announced the acquisition of Capital Steel Service, LLC.
Acquisition of Capital Steel
The Group has completed the acquisition of the business and assets of Capital Steel from its shareholder, Robert Hickman, who will be staying with the business. The initial cash consideration is $6.25m (c.£5m), on a debt and cash free basis. Further cash consideration of up to $1.2m (c.£0.95m) is payable, conditional on Capital Steel’s achievement of financial performance targets in the two years post-acquisition. The acquisition will be funded from the Group’s existing banking facilities.
This is the fourth acquisition Hill & Smith has completed in the last 12 months, in line with the Group’s strategy to acquire complementary businesses within attractive, high growth markets.
Capital Steel, located in Trenton, New Jersey, and led by Robert Hickman, supplies structural steel products and services principally into the electrical transmission and distribution market. It has served the utility and infrastructure needs across the US East Coast for over 25 years, with a focus on New York, New Jersey and Pennsylvania.
Capital Steel will become part of V&S Schuler Utilities Group, within our Engineered Solutions division. The business is highly complementary to our existing activities and will further accelerate our strategy in this high growth market. The acquisition will expand our geographical customer base, generate material cross selling opportunities and provide additional manufacturing capacity and capability.
In the 12 months to 31 August 2023, Capital Steel reported unaudited revenue of $8.1m, adjusted EBIT of $1.0m and gross assets as at 31st August 2023 of $3.7m. The acquisition is expected to be earnings enhancing to the Group in 2024.
Alan Giddins, Hill & Smith Executive Chair, said:
“Capital Steel operates in one of our most attractive end markets, and the acquisition is in line with our strategy of acquiring businesses with strong long-term growth potential. We have known the business for many years, and it is an excellent fit with our existing, high growth US utility business. I am delighted to welcome Robert Hickman and his employees to the Group.”
