May flowers were blooming and so were Cleveland’s publicly held companies. Of the top 10 such companies in the Cleveland area, all have seen market value growth over the past year. In addition, the average annual market value growth has been greater than 35 percent per company.
Four of the top 10 publicly held companies in the Cleveland area either announced or closed acquisitions in the month of May. This growth and activity is an excellent sign for investment in the Cleveland region as companies remain acquisitive, increase revenues and build solid earnings. Listed below are some of the area’s recent acquisitions by publicly traded companies:
J.M. Smucker Co. acquired Rowland Coffee Roasters Inc., a sizeable maker and distributor of Hispanic coffee brands in the U.S., on May 16. The acquisition was for $360 million and the deal is expected to be accretive by fiscal 2012. Smucker’s coffee segment has been doing extremely well lately. After improving sales in its coffee segment by 99 percent from 2009 to 2010, this acquisition should be a great investment for continued growth.
Olympic Steel Inc. announced on May 18 the payment of $150 million in cash and the assumption of $6 million in debt for Chicago Tube and Iron Co. The addition of the almost 100-year-old competitor will allow Olympic Steel to sell piping products to its current customer base, as well as sell its current products to new customers throughout the Midwest.
The Timken Co. announced on May 27 that it will acquire Philadelphia Gear Corp. for $200 million. With this addition to its industrial services business, Timken plans on profitable growth globally as the acquisition is expected to add to earnings in its first full year. Timken has been on a roll lately, nearly doubling its market value over the past year and increasing dividends by 11 percent in May.
Some other notable acquisitions by public companies include Applied Industrial Technologies Inc.’s expansion in Texas with the acquisition of Gulf Coast Bearing & Supply Co. on May 3, Eaton Corp.’s completion of its acquisition of the Internormen Technology Group on May 12, and RPM International Inc.’s increased minority stake in its Indian composites company, Kemrock Industries and Exports Ltd., on May 13. Overall, May was a strong month for M&A activity in Northeast Ohio.Albert D. Melchiorre is the president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcappartners.com. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.
Deal of the Month
Cliffs Natural Resources Inc. receives the deal of the month for its acquisition of Consolidated Thompson Iron Mines Ltd. on May 12. The $4.9 billion (Canadian) deal for the Eastern Canadian company strengthens Cliff’s ability to meet global demand for steel. The transaction will allow Cliffs Natural Resources to increase its customer base with Asian seaborne customers as more than 50 percent of sales will be derived from outside of North America. Currently, Cliff’s portfolio includes 10 iron ore facilities, six coal mines and a chrome development project. Over the past year, Cliffs has seen incredible results as revenue doubled and net income quintupled in 2010. With this transaction, the company hopes to achieve 60 million metric tons of iron ore by the year 2013. Congratulations to Cliffs Natural Resources for a great acquisition.