Scrap-Metal Consolidator Acquires Superior Forge

Superior Forge Inc., one of four independent aluminum hand-forging companies in the nation, said Wednesday it has agreed to be acquired by a Chicago company as part of an effort to form a nationwide metal recycling network.

Owners of privately held Superior will receive 1.08 million shares of stock in the Chicago company, Metal Management Inc. and $1.8 million in cash if the deal is completed. At Wednesday’s $14.88 closing price for Metal Management’s Nasdaq-traded shares, the deal is worth $17.8 million.

Metal Management is a fast-growing consolidator of scrap metal recycling companies. It owns or is acquiring operations in Ohio, Illinois, Los Angeles, Houston and Phoenix. The company said it expects its string of recent acquisitions, including the Superior purchase, to boost annual income to $725 million from $65.2 million in its fiscal year ended March 30.

The company reported a loss of $1.2 million in the fiscal year, but its stock price has risen nearly 68% since the end of March on the strength of its buying binge.

Superior, which has 43 employees and about $15 million in annual revenue, will continue operating under its own name out of its Huntington Beach headquarters, said Alan Shumway, the 3 1/2-year-old company’s chief financial officer. Shumway will continue in the same post after the merger.

Superior founder Ian Albert, a pioneer in the aluminum metals business, will remain company president and become a member of Metal Management’s senior administrative group.

The deal provides Superior with a ready source of raw materials and with new capital and business expansion opportunities, Shumway said. He said employment at the Huntington Beach facility could increase after the acquisition is completed.

Superior, which produces aerospace-quality aluminum stock from alloys and recycled aluminum, would provide Metal Management with its first metal processing plant. Superior is called a hand-forge operation because the molten metal is manually transferred from the furnaces to the huge presses that shape the blocks of raw aluminum.

Shumway said he expects the deal to close within a few months.