Acquisitions |
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| Acquisitions | NOTE 6: ACQUISITIONS On February 13, 2026 (the “Closing Date”), the Company completed the transactions contemplated by the Agreement and Plan of Merger, (the “Merger Agreement”), dated as of October 28, 2025, by and among Ryerson Holding, Crimson MS Corp., an Ohio corporation and a direct wholly owned subsidiary of Ryerson Holding (“Merger Sub”), and Olympic Steel, an Ohio corporation. On the Closing Date, pursuant to the Merger Agreement, Merger Sub merged with and into Olympic Steel in accordance with Ohio law (the “Olympic Steel Merger”). At the effective time of the Olympic Steel Merger, each issued and outstanding share of common stock of Olympic Steel, without par per share (the “Olympic Common Stock”) (other than certain excluded shares), was converted into the right to receive 1.7105 shares of Ryerson Holding’s common stock, rounded down to the nearest whole share, and cash in lieu of fractional shares. Upon the completion of the Olympic Steel Merger, Olympic Steel, as the surviving corporation, became a wholly owned subsidiary of Ryerson Holding. The Olympic Steel Merger is expected to enhance the combined company's presence as one of the largest North American metals service centers and represents a highly compatible strategic match as it will bring Olympic Steel's complementary footprint, capabilities, and product offerings into Ryerson's intelligently interconnected network of value-added service centers. The fair value of purchase consideration amounted to $837.3 million. As a result of the Olympic Steel Merger, Ryerson Holding issued 19.5 million shares of its common stock to former holders of Olympic Steel's common stock amounting to $527.3 million. As part of purchase consideration Ryerson Holding paid a total $270.0 million, net of cash acquired, to extinguish Olympic Steel's existing debt of $300.5 million and to settle certain outstanding performance based stock units that converted to cash of $1.7 million as of the Closing Date. Ryerson Holding also converted Olympic Steel's restricted stock units to Ryerson restricted stock units amounting to $7.8 million for the units that were vested as of the Closing Date. For the unvested restricted stock units that were transferred to Ryerson restricted stock units on the Closing Date, $0.8 million of compensation expense will be recognized in future periods. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the Closing Date:
The Olympic Steel Merger was accounted for under the acquisition method of accounting and, accordingly, the purchase price for the transaction has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the Closing Date. The Company utilized a third-party valuation firm to determine the fair values of inventory, property, plant, and equipment, leases, and intangible assets by utilizing management estimates, and assumptions using income, market, and cost approaches, and assumptions such as projections of future revenues, costs and cash flow, discount rates, and long-term growth rates. As of the reporting date, the purchase price allocation was based on preliminary estimates as the Company was unable to obtain all of the information necessary to finalize the determination of fair values for the assets acquired and liabilities assumed. These provisional assets and liabilities will be adjusted to reflect the final determined amounts and management's valuation of deferred income taxes, and those adjustments may be material. The fair values of all assets acquired and liabilities assumed are considered preliminary as reflected on the Condensed Consolidated Balance Sheet as of June 30, 2026. The fair value measurement of property, plant, and equipment and intangible assets are characterized as Level 3 in the fair value hierarchy. The measurement period for purchase price allocations will end no later than 12 months after the acquisition date. Given the short period of time between transaction close and first quarter 2026 reporting, the first quarter 2026 purchase price allocation was based on preliminary estimates from a benchmarking allocation analysis using historical transactions as a basis. During the three months ended June 30, 2026, refinements were made to the purchase price allocation that resulted in a net increase to goodwill of $2.9 million, primarily due to valuation adjustments of a decrease in accounts receivable of $0.1 million, an increase in inventory of $16.1 million, an increase in property, plant, and equipment of $55.3 million, a decrease in operating lease right-of-use assets of $2.9 million, a decrease in intangibles assets of $72.6 million, a decrease in operating lease liabilities of $4.4 million, an increase in net deferred tax liabilities of $2.7 million, and an increase in other liabilities of $0.4 million. As part of the preliminary purchase price allocations, we allocated $13.0 million to trade names and $17.0 million to customer relationships with useful lives of 5 years and 10 years, respectively. The goodwill arising from the Olympic Steel Merger consists largely of expected strategic benefits, including enhanced operational scale and expansion of processing capabilities across the combined Company. See Note 5: Goodwill and Other Intangible Assets for further information on the goodwill recorded. The fair value of accounts receivable acquired is $200.2 million. Based on our preliminary assessment, $0.1 million of accounts receivable was deemed uncollectible. Included in the Condensed Consolidated Statements of Comprehensive Income (Loss) were net sales related to Olympic Steel of $564.2 million and $836.9 million and net loss related to Olympic Steel of $7.8 million and $3.7 million for the three and six months ended June 30, 2026, respectively. The Olympic Steel net loss in 2026 is being driven by a $15.7 million increase to cost of materials sold in the second quarter related to a partial roll off of inventory purchase accounting fair value adjustments. The Company recognized a total of $14.6 million in acquisition-related fees, $0.5 million and $6.8 million of which were included in Warehousing, delivery, selling, general, and administrative expense in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months period ended June 30, 2026, respectively. The remaining acquisition related fees were recorded in the fourth quarter of 2025. The following unaudited pro forma information represents consolidated results of operations after the effects of certain adjustments, including elimination of intercompany sales, adjustments to amortization and depreciation expense related to the preliminary fair value adjustments, interest expense incurred on new financing, stock compensation expense, one-time transaction costs, and the tax effects of the adjustments for the three and six months ended June 30, 2026 and 2025 as if the Olympic Steel Merger on February 13, 2026 had occurred on January 1, 2025. The supplemental pro forma net income attributable to Ryerson Holding Corporation was adjusted to move the $15.7 million inventory adjustment to cost of material sold recognized in the three and six months ended June 30, 2026 and the one-time transaction costs of $7.8 million from the fourth quarter of 2025, $0.5 million from the three months ended June 30, 2026, and $6.8 million from the six months ended June 30, 2026 into the first quarter of 2025 as these are nonrecurring items. These pro forma results are presented for comparative purposes only and are not indicative of what would have occurred had the Olympic Steel Merger been made as of January 1, 2025, or of any potential results which may occur in the future:
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