Topic: How To Invest

Power Growth Investor Hotline – Friday, April 16, 2021

Article Excerpt

RUSSEL METALS INC., $28.16, is a buy. Through their shares, investors tap one of North America’s largest metal distributors: the company (symbol RUS on Toronto) serves 33,000 clients at 48 locations in Canada and 16 in the U.S. This week, Russel and Japan’s Marubeni-Itochu Tubulars America agreed to combine their respective Canadian OCTG/line pipe businesses. These units sell pipe to oil and gas companies. The combined business of Russel’s Triumph Tubular & Supply unit and Marubeni-Itochu’s Hallmark Tubulars unit will operate as a newly incorporated company, TriMark Tubulars. Russel will contribute assets with a book value of about $111 million. In exchange, it will receive: (i) cash of approximately $79 million; (ii) preferred shares with a face value of $32 million and an annual dividend rate of 7%; and (iii) a 50% equity interest in TriMark. Russel Metals will also retain Triumph’s accounts receivables worth $59 million, for total cash proceeds of $138 million. Over the past several years, the business conditions for the…

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