What Does Nucor See in Garage Doors? An Opening

Before the pandemic, industrial companies that struggled to grow had few options. They could break up and use financial engineering to spotlight different pieces of their business, although such splits were increasingly delivering less bang for their buck. They could buy a software company — and many did just that — but investors have grown increasingly skeptical of the sky-high valuations such deals typically entail, and so far these acquisitions have had a limited measurable impact on industrial valuations. There is a third option: diversification — a previously dirty word in the industrial realm that’s becoming interestingly less so two years into Covid and supply chain disruptions.

Nucor Corp., the largest U.S. steelmaker, announced last week that it was buying C.H.I. Overhead Doors, a maker of garage and warehouse doors that uses steel for many of its products, from KKR & Co. The $3 billion deal follows the $1 billion purchase of Cornerstone Building Brands Inc.’s insulated metal panel business and the $370 million takeover of steel-racking manufacturer Hannibal Industries Inc., both of which took place last year. The purchases expand and complement Nucor’s existing steel decking, joists and building product systems businesses. But C.H.I. is also the company’s biggest ever acquisition and a sign that its efforts to think beyond steel beams and bars made for other manufacturers are shifting into a new gear. “We’re the industry leader in just about everything we’re doing. That growth platform gets stymied if we want to remain in North America,” Nucor Chief Executive Officer Leon Topalian said in an interview. “We’ve got to diversify.”