The merger, which is subject to shareholder approval and successful separation of the Hugo Neu Corporation from an existing arrangement with Schitzner Steel, will form the world's largest metal recycling company, a joint statement said.
It will also see Sims involved in a landmark 20-year recycling contract to run the New York City's metal, glass and plastics recycling kerbside service.
The company formed from the merger will be known as the Sims Hugo Neu Company, or Sims Newco, with family-owned Hugo Neu becoming the largest shareholder with a share of 26% of the company. Existing Sims Group shareholders will hold 74% of the new company.
Neu
Hugo Neu is one of the largest processors and is the largest exporter of ferrous metal in the United States, handling about 20% of US exports of ferrous metal. The metal recycling divisions of Hugo Neu has been valued at the equivalent of 274 million (at current exchange rates).
The merger is expected to be completed by September, after which Sims Newco will handle about nine million tonnes of metal each year, achieving about 1.7 billion worth of sales, with earning before tax at a level of about 210 million.
The new company will see 60% of earnings within North America, 25% in Australia and New Zealand and 15% in the UK and Europe.
Mr Paul Mazoudier, Chairman of Sims Group said: “This merger will transform the company and builds on Sims Group's proven track record of successful international expansion. It will position Sims Group as the global leader of the metal recycling industry, with a sound platform to adopt a broader approach to environmentally sound post consumer recycling.
“On behalf of the Sims Group Directors, I hope the proposed merger will receive shareholder support and we look forward to welcoming John Neu and his nominee to the new Sims Group Board, as well as the Hugo Neu management team and employees to the Group,” Mr Mazoudier added.
Non-metallic
Lister on the Australian Stock Exchange, Sims Group is one of the two largest metals recyclers operating in the UK, and has recently diversified into recycling other materials, including tyres. The joint statement said that the merger with Hugo Neu would “significantly strengthen” the expansion of Sims Group's non-metallic recycling platform.
In the United States, a division of Sims Newco will also oversee post-consumer recycling activities, including a landmark 20-year recycling contract to collect New York City's metal, glass and plastic, a contract expected to be finalized by the end of this year.
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