The leaders of Nucor Corp. are adding a manufacturer of garage and overhead doors to their portfolio of steel products businesses in a deal worth $3 billion.
Charlotte-based Nucor is paying cash for C.H.I. Overhead Doors, which employs 800 people and has been owned by private-equity giant Kohlberg Kravis Roberts & Co. since 2015. C.H.I. runs two plants in Illinois and Indiana that combined span 1.2 million square feet as well as five warehouse across the country. The company has annual revenues of about $600 million and EBITDA margins of more than 30%; Nucor’s deal values it at about 13 times EBITDA.
On a conference call with analysts, President and CEO Leon Topalian said buying C.H.I. further bulks up Nucor’s roughly $10 billion steel products group, gives the company its first substantial exposure to the residential construction sector and brings with it products that—with their need for doors, rails, panels and other components—“marry up incredibly well with our current downstream businesses.” C.H.I. CEO Dave Bangert and his leadership are expected to remain in their roles.
“This is right in our wheelhouse,” Topalian said in talking about C.H.I.’s efficiency and its potential to grow quickly as a part of Nucor’s network.
KKR executives said the firm will take home 10 times the equity it has invested in C.H.I. when the deal closes, which is expected to happen next month. Since taking ownership of C.H.I., they said the company’s EBITDA margin has grown from about 21% to more than 30% while revenues more than doubled.
“We were approached many times over the years by many prospective acquirers but Nucor was without question the right home for the business,” said Pete Stavros, co-head of the Americas Private Equity group at KKR.
Topalian and his team early this year paid $400 million for a majority stake in flat-rolled steel converter California Steel Industries but the plan to buy C.H.I. and further expand its steel products group fits more closely with last year’s deals for steel racking products maker Hannibal Industries and insulated metal panels business Cornerstone Building Brands. Combined, Nucor paid nearly $1.4 billion for those ventures.
Investors, likely taking note of the rich EBITDA multiple Nucor’s is paying for C.H.I., weren’t terribly enthusiastic about the news: In afternoon trading May 16, shares of the company (Ticker: NUE) were down more than 3% to about $120. Year to date, they’re now up about 5%.
