Schnitzer Steel Acquires Pick-N-Pull Auto Dismantlers
Portland, OR - One of Schnitzer Steel Industries, Inc.'s
wholly-owned subsidiaries has signed a definitive agreement to acquire
the interest of its 50 percent partner in Pick-N-Pull Auto Dismantlers.
In addition, Schnitzer's subsidiary has agreed to buy the Stockton Pick-N-Pull
store, which is not part of the joint venture, but is the single largest
volume store in the Pick-N-Pull network. The seller in the transaction
is Bob Spence, who currently manages Pick-N-Pull.
The joint venture stores, together with Stockton (Pick-N-Pull), are one
of the country's leading self service used auto parts and auto dismantling
networks, with 23 locations in northern California and five other states.
The self-service auto dismantling business is believed to be the fastest
growing segment in the auto dismantling business.
At each store, automobiles are displayed for customers to view and remove
parts to purchase. The remaining recycled auto bodies are then sold for
scrap to area metals recycling facilities, including Schnitzer. Currently,
Schnitzer's Oakland, California, metals re-cycling facility is Pick-N-Pull's
largest customer of its recycled auto bodies.
Schnitzer's subsidiary has been a 50 percent partner in the joint venture
for the past thirteen years. Commenting on the acquisition, Robert W.
Philip, President and Chief Executive Officer, called attention to the
fact that, "Our joint venture in Pick-N-Pull has, for many years,
been an important part of our strategy to grow in the metals recycling
business." Philip went on to comment that, "Bob Spence and his
experienced management team have taken this business to a new level, which
is demonstrated by the fact that from 1999 to 2002, the net profits generated
from this business have grown at a compounded annual rate of nearly 50
percent. We are pleased to say that pursuant to the terms of the acquisition
agreement, Mr. Spence will continue to operate Pick-N-Pull at least through
January 31, 2004. It is our plan to continue to support Pick-N-Pull's
management team with the capital and infrastructure needed to aggressively
ex-pa nd this business."
The acquisition is expected to close in mid-February 2003. The estimated
purchase price is approximately $85 million, subject to adjustment for
certain year-end balance sheet items and environmental liabilities, if
any. The estimated purchase price includes the assumption of approximately
$10 million of net debt, approximately $6 million of which represents
amounts currently owed to Schnitzer. In addition to typical closing conditions,
the transaction is contingent upon satisfactory completion of environmental
due diligence on Pick-N-Pull's facilities. The agreement also provides
for a purchase price adjustment approximately one year after closing based
upon the operating results of the acquired business.