Sims announces Hugo Neu acquisition.

The Sims Group, an Australia-based scrap metal recycling company, has announced an agreement to merge its metal recycling operation with Hugo Neu Corp. of New York City.

The merger follows quickly on the dissolution of a joint venture arrangement between Hugo Neu and Schnitzer Steel.

The combined company will go by the name Sims Newco. According to Sims, it will be the largest metal recycler in the world based on market capitalization.

Hugo Neu is one of the largest scrap exporters in the United States, handling around 20 percent of all ferrous scrap exported from U.S. deep-water ports. Hugo Neu operates a deep-water port in the Los Angeles area and one in the New York/ New Jersey area. It has 15 scrap metal collection and processing facilities.

According to a press release from Sims, privately owned Hugo Neu had sales of nearly $1.35 billion last year.

Jeremy Sutcliffe, CEO of Sims Group, says, "The cornerstone of our corporate goal has been to continue expanding Sims Group's core metal recycling business internationally, provided strict acquisition criteria are met. These include the requirement that any new business holds the No. 1 or No. 2 market position in relevant markets, provides domestic and export marketing flexibility and offers a platform for future growth, while also enhancing shareholder value."

Sutcliffe continues, "The merger with Hugo Neu satisfies all of these criteria and in particular consolidates Sims Group's North American West and East Coast market positions and delivers a significant platform from which to grow. The New York City recycling contract is a particularly exciting opportunity." He adds, "I am confident shareholders will recognize this and vote in favor of the merger."

Sims Newco will have more than 120 physical operations globally, with a combined volume or more than 9 million metric tons of scrap metal.

The deal is expected to be complete by early this fall, pending Sims Group shareholder approval.