Sims Metal, a leader in metal recycling, will acquire the commercial and operating assets of Pennsylvania-based Northeast Metal Traders (NEMT).
NEMT, a non ferrous scrap metal wholesaler and broker, operates a single-scale site in Philadelphia and has extensive supplier and end-consumer relationships that stretch across the eastern U.S. NEMT is one of the largest copper recyclers in the U.S. They process and sell approximately 60,000 tons of non ferrous metal per year.
The transaction consideration implies an EV/EBITDA multiple of 4.8x on a pre-synergies basis (including estimated working capital).
The NEMT acquisition is in line with the company’s growth strategy, which includes the expansion of the non ferrous business in North America (Sims Metal North America), and the allocation of growth capital expenditure toward assets that yield a minimum post-tax internal rate of return (IRR) of 15 percent.
Furthermore, it meets the core strategic elements of the merger and acquisition framework – targeting businesses with operations in large markets and producing high-quality differentiated outputs. Disciplined capital allocation remains a focus for the business, and Sims Metal intends to fund this acquisition through recycling surplus and/or underperforming capital.
This acquisition will substantially increase the copper volumes in the metal business, as the Northeast focuses predominantly on high-quality copper granulation. Furthermore, with the demand for copper scrap growing rapidly, it will strengthen Sims Metal’s exposure to the energy transition and decarbonization.