Insteel Industries, Inc. (Nasdaq: IIIN) today announced that its wholly-owned subsidiary, Insteel Wire Products Company (together referred to as "Insteel" in this press release) has purchased certain of the assets of Ivy Steel & Wire, Inc. ("Ivy") for a purchase price of approximately $51.1 million, subject to certain post-closing adjustments (the "Ivy Acquisition").
Ivy, a division of Oldcastle, Inc, the U.S. holding company of CRH PLC (NYSE: CRH), is one of the nation's largest producers of welded wire reinforcement and wire products for concrete construction applications. Ivy operates five facilities, which are located in Arizona, Florida, Missouri, Pennsylvania and Texas. In 2009, Ivy reported net sales of $104.3 million.
Under the terms of the purchase agreement, Insteel acquired, among other assets, certain of Ivy's inventories and its production facilities located in Hazleton, Pennsylvania; Jacksonville, Florida; Kingman, Arizona; and St. Joseph, Missouri in addition to the production equipment located at its Houston, Texas facility for $37.6 million of cash and a $13.5 million secured subordinated note payable to Ivy over five years. Ivy retains, among other assets, accounts receivable and the assets associated with its Pilot Steel operations located in Pompano Beach, Florida. The purchase price is subject to an adjustment to be determined based upon the closing working capital balance and may be further adjusted if Ivy does not comply with certain obligations contained in the purchase agreement. The cash portion of the purchase price was funded from cash and cash equivalents on hand.
"The addition of Ivy's facilities to our existing geographic footprint enhances Insteel's competitiveness in the Northeast, Midwest and Florida markets in addition to providing a platform to serve west coast markets more effectively," commented H.O. Woltz III, Insteel president and chief executive officer. "We expect that the integration of Ivy will result in enhanced customer service capabilities and significantly lower operating costs."