Zekelman Industries withdraws stock offer
Zekelman Industries has withdrawn its application for an Initial Public Offering (IPO) of stock. In a telephone interview with The Star, Lakeshore-based chief executive officer and chairman Barry Zekelman confirmed: “We pulled it. We had a price range we wanted to see and it was at the lower end of that price range.” In a memo sent to“Zekelman Industries Teammates” and dated Tuesday, Zekelman explained the decision.
“We felt the transaction we were offered did not adequately compensate our company for the value we have created,” the memo stated.
“As a result, we have elected to withdraw the public offering.” The Chicago-based business filed for an IPO last month to the U.S. Securities and Exchange Commission, with plans to list its shares on the New York Stock Exchange and the Toronto Stock Exchange.
According to industry publications, Zekelman Industries hoped to raise $752 million through the sale of 41.8 million shares in a U.S. IPO, with individual shares selling at $17 to $19 each.
An IPO is a strategic way for a company to raise money through the public sale of stock previously owned by founders and investors. One online business news outlet noted the company’s recent growth and future plans for other “strategic acquisitions.”
Last year, the company bought American Tube Manufacturing Inc. and Western Tube & Conduit Corp.
Without getting into specifics, Zekelman said the business plan remains the same, even without an IPO.
“We’ll keep doing what we’re doing, we’re a growth story, it’s just going to be a little different path,” he said. “I’m honestly not disappointed at all.”
The memo stated “our team has been working hard to educate the capital markets on the incredible value proposition that we as a company deliver to our customers.”
In a later interview, Zekelman said analysts “categorized us as steel makers and we’re not, we’ve a very different company.” The company website describes Zekelman Industries as the largest independent steel pipe and tube manufacturer in North America. The website says the business is “a leader in modular construction innovations” with 15 locations in North America, including the Atlas Tube plant in Harrow. Zekelman said the idea to apply for an IPO was born from “some bigger opportunities we felt might be available, some different deals with public currency, but none of them were a necessity.”
He added: “It was never our intention to exit or go anywhere, this is just a different pathway. We’ve planned for a lot of great things ahead. It’s just that we’re going to be doing them in a different manner.”
According to Bloomberg News, Zekelman Industries’ filing listed a net income of $161 million on net sales of $2.1 billion for the most recent fiscal year. That compares to $68 million on sales of $1.6 billion from a year earlier.
The IPO application was filed in the summer and came at a time when the U.S. government sparked significant concern over tariffs and trade wars.
We’ll keep doing what we’re doing, we’re a growth story, it’s just going to be a little different path. BARRY ZEKELMAN