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Reliance Steel & Aluminum (RS) Snaps Up Best Manufacturing

Reliance Steel & Aluminum Co. RS said that it has purchased all of the capital stock of Arkansas-based Best Manufacturing, Inc. The terms of the deal were not divulged.   

Best Manufacturing is a custom sheet metal fabricator of steel and aluminum products. The entity, which had sales of roughly $20 million in 2015, has been catering its major customer markets including trucking, agriculture and energy since 1990.

Best Manufacturing offers an array of precision fabrication services including laser cutting, shearing, rolling as well as welding, assembly, painting, inventory management and engineering expertise. Best Manufacturing is a one-stop source for all sheet metal fabrication requirements and has a high reputation in the markets it serves.

The acquisition is a strategic fit for Reliance Steel and highly complements its existing service center network given Best Manufacturing’s specialty high margin products, value-added processing capabilities and strong focus on customer service. Best Manufacturing will operate as a fully-owned unit of Reliance Steel and its current management will remain in place.

Reliance Steel continues its aggressive acquisition strategy to drive growth. The company completed the acquisition of steel and aluminum components maker Metals USA in 2013. The buyout complements Reliance Steel’s existing customer base, product mix and geographic footprint.

Moreover, the acquisition of Aluminium Services UK Limited in 2014 has allowed Reliance Steel to expand its presence in the aerospace market. The purchase of Fox Metals and Alloys has also strengthened the company's foothold in the oil and gas space. The buyout of Tubular Steel earlier this year also boosts the company’s long-term growth strategy and strength by expanding its product portfolio and end market diversification.

Reliance Steel is also seeing strong demand for its products across aerospace and automotive markets. Demand in the aerospace market is backed by higher commercial aerospace build rates. Strong demand is also witnessed in the automotive market, supported by the company’s toll processing businesses in the U.S. and Mexico as well as increased use of aluminum in the industry. Reliance Steel expects sustained momentum across these markets in 2016.

However, Reliance Steel remains challenged by weak steel industry fundamentals and soft steel and metals pricing.

Reliance Steel is a Zacks Rank #3 (Hold) stock.

Some better-ranked companies in the basic materials space include AK Steel Holding Corporation AKS, Companhia Siderurgica Nacional SID and TimkenSteel Corporation TMST, all holding a Zacks Rank #2 (Buy).

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RELIANCE STEEL (RS): Free Stock Analysis Report
AK STEEL HLDG (AKS): Free Stock Analysis Report
CIA SIDERUR-ADR (SID): Free Stock Analysis Report
TIMKENSTEEL CP (TMST): Free Stock Analysis Report
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