Steel production company Nucor Corporation (NYSE: NUE) will acquire overhead doors manufacturer C.H.I Overhead Doors from private equity company Kohlberg Kravis Roberts & Co. L.P. in a $3 billion cash deal that will further expand Nucor’s offerings.
The transaction value represents approximately 13 times C.H.I.’s estimated trailing twelve-month EBITDA at close. The deal is expected to be immediately accretive to earnings in the first year.
As stated in the filings, C.H.I. makes residential and commercial garage doors “as well as rolling steel and rubber doors for commercial and industrial customers.” It has a manufacturing plant in Illinois and one in Indiana as well as warehouses in California, Colorado, New Hampshire and New Jersey. Documents state that “C.H.I. is able to maintain minimal inventory levels and realize industry-leading fulfillment times, while providing direct delivery to customers.”
“Acquiring C.H.I. is another step in our long-term strategy to expand into areas that are a natural extension of our business and leverage our efficient manufacturing model,” Leon Topalian, President and Chief Executive Officer of Nucor Corporation said in a press release. “C.H.I. is a highly profitable organization built with an amazing team and culture. It has consistently proven its strength and competitive advantages due to its broad product suite, very short lead times, robust delivery infrastructure, and focused customer service.”
The overhead door market is a $5 billion growing market with both residential and commercial consumers. Furthermore, “commercial overhead doors are used in warehousing and retail, areas that Nucor has focused its attention recently through other value-added products such as insulated metal panels (CENTRIA, Metl-Span and TrueCore brands) and steel racking solutions (Hannibal Industries and Elite Storage Solutions). It is expected that the C.H.I. acquisition will also benefit from Nucor’s recent paint line investments at its Hickman, Arkansas, and Crawfordsville, Indiana, sheet mills.”
The deal, announced May 16, is expected to close in or around June 2022, pending regulatory approval and customary closing conditions.
Nucor’s legal counsel is Moore & Van Allen PLLC and its financial advisor is Moelis & Company. Kirkland & Ellis LLP is the legal counsel to Kohlberg Kravis Roberts and C.H.I. Overhead Doors.
Prior to the announcement, Nucor’s stock was valued at $123.79 on May 13. When the deal was announced on May 16, the stock closed at $119.75. A few days later, on May 23, stock closed at $126.31.
The proposed acquisition of C.H.I is another in Nucor’s long-list of acquisitions in 2021 and 2022. This follows Nucor’s acquisition of Elite Storage Solutions, a steel racking manufacturer, for $75 million in April of this year as well as its completed acquisition of California Steel Industries in February for $400 million. Meanwhile in October 2021, Nucor expanded its Nucor Fastener division by acquiring a coil processing facility for an undisclosed amount. In August 2021 it completed its $370 million acquisition of Hannibal Industries and it completed its acquisition of Cornerstone Building Brands’ insulated metal panels for about $1 billion.