Moving Metal

the market were dropping and there was not enough demand to make it viable. Since the seller did not want to accept Reliance common stock as partial payment, Reliance drew on its existing $1.1 billion credit line and negotiated a $500 million senior unsecured loan to buy the group. The acquisi- tion was completed on August 1, 2008. Reliance management believed that acquiring PNA was a big step forward for Reliance’s growth strategy because it simultaneously provided product diversity, new businesses, and wider geographic coverage. But integrating PNA ulti- mately proved problematic. Gregg Mollins called it “the most difficult acquisition we’ve ever made.” Despite its multiple

national company. PNA consisted of Delta Steel, Inc.; Feralloy Corporation; Infra-Metals Co.; Metals Supply Company, Ltd.; Precision Flamecutting and Steel, Inc.; and Sugar Steel Cor- poration. The six companies specialized in carbon steel plate, bar, structural, and flat-rolled products for the nonresi- dential and construction markets and operated twenty-three steel service centers throughout the United States. PNA also operated six additional service centers in the United States and Mexico on a joint venture basis. The price tag for PNA was $1.1 billion in cash, making it Reliance’s largest purchase ever—only EMJ came close. Reliance considered doing a secondary stock offering to finance the deal, but valuations in

PNA was heavy with carbon steel, which presented Reliance with a challenge at the outset of the Great Recession of 2008.

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