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June 07, 2021 12:47 PM

Nucor acquires Cornerstone's insulated metal panels unit for $1B

Catherine Kavanaugh
Senior Reporter
Plastics News Staff
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    Cornerstone Building Brands Inc.
    Cornerstone Building Brands Inc. will sell its insulated metal panels business for walls and roofs to Nucor Insulated Panel Group Inc. in a $1 billion cash deal. The panels feature metal exteriors with a foam core to improve insulation.

    Cary, N.C.-based Cornerstone Building Brands Inc. will sell its insulated metal panels (IMP) business for walls and roofs to Charlotte, N.C.-based Nucor Insulated Panel Group Inc. in a $1 billion cash deal.

    Cornerstone, the largest exterior building products manufacturer in North America, is parting with its Metl-Span- and Centria-brand product lines, seven manufacturing facilities, three offices and a product innovation center.

    The IMPs in the two product lines consist of steel or aluminum skins and a foam insulating core for aesthetics and performance. The panels, which come in a variety of colors and finishes, provide air and moisture protection and thermal insulation. They are used to create contemporary facades for architectural and commercial applications, such as offices, hotels, banks and the quickly expanding markets for cold storage and warehouses.

    The pending deal will accelerate the acquirer's plan to improve its product offering, according to Nucor President and CEO Leon Topalian.

    "We are excited about this opportunity to acquire a historical leader and innovator in the quickly growing IMP product category serving the nonresidential market," Topalian said in a news release. "We are committed to finding new and better ways to meet our customers' needs, and this acquisition is an excellent fit with Nucor's long-term strategy to grow our core business and expand our product portfolio."

    The deal is expected to close later this year pending regulatory approvals.

    The selling price is about 10 times pre-pandemic earnings before interest, taxes, depreciation and amortization (EBITDA) and inclusive of expected synergies, the release says. However, after adjusting for the net present value of associated tax benefits, the purchase price for Nucor is about $900 million, the release adds.

    Demand for IMP products is expected to build at double-digit annual growth rates through the decade as consumer preferences shift to e-commerce and grocery delivery and the number of data centers and server farms, which all require temperature-controlled climates, increases.

    The seven manufacturing facilities Nucor is acquiring are located throughout North America and complement both the footprint of the company's buildings group and its existing IMP business called TrueCore.

    About 830 Cornerstone employees will be transferred to Nucor. The facilities and employees will continue to operate in the ordinary course until closing, according to a Cornerstone news release.

    In addition, Nucor and Cornerstone will enter into a long-term supply agreement. This agreement lets Cornerstone continue to offer IMP products.

    "We have cultivated our IMP business into a market leader with strong assets," Cornerstone Chairman and CEO James Metcalf said in the release. "The IMP business is a better strategic fit with Nucor, who is well positioned to take the business even further. We will continue to focus on investing in our core growth markets and driving value through our primary selling channels."

    Before the purchase, Nucor was predominantly a steel and steel products company and recycler of metals. In the first three months of 2021, the company had sales of $7 billion and operating profit of $1.3 billion.

    Cornerstone was previously known as NCI Building Systems. In the third quarter of 2019, the insulated metal panels business had sales of $109.6 million, up 2.5 percent for the same period a year earlier.

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