Big numbers = Big impact??
When a company with a turnover in excess of £16 billion purchases a large UK steel business, it’s time to sit up and listen.
On the 4th of October 2022, exactly that happened when Marubeni-Itochu Steel Europe GmbH (MISEA), the European arm of Japanese steel giant Marubeni-Itochu Steel Inc. (MISI), acquired 100% of the shares from BREAL Capital and took over as owners of B&M Steel.
What do I need to know about the acquisition?
In a press release from MISI in October 2022, they stated: “Through this acquisition, MISI will establish a strategic position in the UK steel market, which is a growth market with a steadily increasing population and consistent demand for construction materials. MISI will expand the business areas it is active in, and enhance its market presence through B&M’s wide range of customer networks, variety of materials and advanced sales approaches, such as e-commerce.”
The steel sector in the UK is dominated by a handful of large national and multinational businesses, where consolidation is not uncommon. This acquisition is ground-breaking since, before this deal, MISI had no interests in the steel stockholder space in the UK or Europe.
It was no secret within the industry that BREAL Capital were seeking a buyer for B&M Steel, but the sheer size of the new owners cannot be ignored.
Marubeni-Itochu Steel Inc. wants B&M Steel Group to grow to be the number one steel stockholder in the UK.
The Metal Magazine was invited to cover the story. I met with Kyle Greenwood, the Commercial and Operations Director for B&M Steel, in late 2022 to record a podcast (due for release in early 2023) and a video interview about the acquisition.
Kyle spoke candidly about his involvement in the company over the last 4 years and his role in helping to develop operational efficiencies across the group.
BREAL Capital acquired Barclay & Mathieson (B&M) from Stemcor in 2015, which at the time was operating at sub-optimal levels.
BREAL’s strategy – BUY AND BUILD – quickly added Industrial Metal Supplies (IMS), Avon Steel, Steel Plate & Sections (SPS) and Abram Pulman to the group of companies.
In 2021, BREAL decided that they had two options: They could sell the group to allow the new owners to develop their own future path, or they could continue acquiring and investing for a larger sale at a later date.
Marubeni-Itochu Steel Inc. (MISI) has a turnover in excess of £16 billion annually. With such revenues of traded commodity steel, margins are low. Their strategy appears to be a simple one: Acquire a number of high-profit steel businesses across the globe. It would seem that the acquisition of B&M Steel is the first of many.
Their plans could not be more clear. MISI wants B&M Steel to be the number one steel stockholder in the UK. This goal is not based on pure turnover or tonnes of stock, but is based on profit.
B&M Steel have a proven track record and their own roadmap for acquiring and improving steel companies, so it is inevitable that more steel businesses will be acquired by the group in the not-too-distant future.
Who are B&M Steel?
The group currently comprises B&M Steel, Steel Plate & Sections (SPS), Industrial Metal Services (IMS), Avon Steel and Abram Pulman – steel businesses that were acquired and integrated over a 7-year period by BREAL Capital.
Each of these businesses had been purchased while they were trading in sub-optimal conditions or required a major turnaround.
With this varied collection of companies, B&M has a diverse product and service offering in a number of markets, including oil and gas, shipbuilding, offshore and on-land renewable energy, architectural and access & safety products.
More recently, investment into an e-commerce platform has brought significant growth across the entire portfolio.
Barclay & Mathieson are historic names in the UK steel sector, with the original company having been founded in 1877, but B&M Steel wouldn’t have been seen as a major player when they were acquired by BREAL Capital in 2015.
The change in the business has been fast and impressive. With a full rebrand, a growing e-commerce platform, expanding stock range and a shift of focus to service over price, the business has fundamentally changed.
What’s next?
Under new ownership, with a seemingly unlimited investment opportunity through the backing of the Marubeni-Itochu group, B&M are ideally positioned to continue their success in the UK.
We will keep a close on the business as it enters a new era, and look forward to seeing how each division of the business continues to develop.
In the extended interview that we conducted with Kyle for season three of The Metal Guys Talk Business, we talk in more detail about positioning B&M for sale, the future outlook for the business post-acquisition, the environment and legislative changes for UK steel companies, and the environmental challenges that we all face.
The podcast is due to be released in February 2023. Subscribe now via your preferred podcast platform so that you’ll be notified when it’s available.
What are your thoughts about this acquisition? Share your comments on LinkedIn or Twitter, we’d love to hear from you.
Find out more about Marubeni-Itochu Steel Inc. by visiting their website: www.benichu.com
