Reliance shares tumble on news
Shares of Reliance Steel & Aluminum Co. fell 7.9% after the Los Angeles distributor of metal products said it might sell as many as 7.76 million new shares to help fund the acquisition of PNA Group Holding Corp.
The company’s stock price dropped $5.66 to $66.13. Before Thursday, the stock had gained 32% this year.
Reliance also reported that second-quarter net income rose 27% to $156.6 million, or $2.12 a share, from $122.8 million, or $1.59, a year earlier. Sales rose 10% to $2.1 billion.
Under its plan to sell new stock, Reliance said the cash would be used to fund the $1.1-billion acquisition of PNA Group, which operates steel service centers in the U.S. and Mexico.
Reliance, which distributes more than 100,000 metal products, is buying assets to boost growth amid rising demand for steel and record prices. The company has made more than 35 acquisitions since selling shares to the public in 1994.
U.S. steel-sheet prices increased to a record $1,052 a ton in June after producers took advantage of lower imports and inventories to pass on higher raw-material costs, Purchasing magazine said in a June 30 report.
