A.M. Castle Increases 27% After Platinum Equity Buys Stake
A.M. Castle & Co. (CAS), a U.S. metals distributor rose the most in more than three years after billionaire Tom Gores’ investment firm Platinum Equity LLC bought a stake in the company and said it might try to buy the rest.
A.M. Castle, based in Chicago, rose 27 percent to $11.69 at the close in New York, the biggest gain since March 10, 2009.
Platinum Equity, based in Beverly Hills, California, bought a 6 percent stake through metal distributor Ryerson Inc., according to a filing with the Securities and Exchange Commission yesterday. The shareholders plan to discuss alternatives including a possible acquisition of A.M. Castle by Platinum or Ryerson, according to the filing.
Platinum could cut costs by combining the two distributors said Timothy Hayes, an analyst at Davenport & Co. in Richmond, Virginia.
“Platinum’s already there and they can bring in Castle which allows them to gain synergies if they fold in Castle with their other service centers,” Hayes said in a telephone interview.
The company is searching for a new chief executive officer after the departure of Michael H. Goldberg in May in what the company said was “a proactive decision by the company’s board of directors to identify and hire a CEO who will effectively execute A.M. Castle’s strategy and deliver improved returns for shareholders.”
A.M. Castle has a market value of $269.9 million. Platinum bought Ryerson for $915 million in 2007.
To contact the editor responsible for this story: Simon Casey at email@example.com