ShareThis Page

Pritzker family buying Glassport-based TMS in $1B deal

| Monday, Aug. 26, 2013, 8:51 a.m.

One of America's wealthiest families said on Monday it will spend about $1 billion in cash to acquire one of the largest scrap metal suppliers to steel mills — Glassport-based TMS International Corp. — and expand it.

TMS, parent of Tube City IMS Corp., agreed to be sold to The Pritzker Organization, which is run by hotel heir Tom Pritzker.

Pritzker is one of 11 heirs to a $15 billion family-owned global industrial conglomerate that was slowly broken apart between 2001 and 2011. The company founded the Hyatt chain of hotels and owned a variety of industrial companies. Ten Pritzker family members are listed as billionaires on the annual Forbes 400 list. Penny Pritzker, a first cousin of Tom Pritzker, became secretary of Commerce in June.

The acquisition of TMS is Tom Pritzker's first investment since the breakup of the family company. He is executive chairman of Hyatt, which went public in 2009, and chairman of Marmon Holdings, a diversified industrial company that Pritzker sold to Warren Buffett's Berkshire Hathaway in 2008.

TMS provides outsourced industrial services to steel mills, such as supplies of scrap metal, slag processing and logistics support in 12 countries. The company has 36 brokerage offices from which it buys and sells raw materials. TMS employs about 4,400 people, including about 300 in the Pittsburgh region.

It is among the largest suppliers of scrap metal to the steel industry, including companies such as U.S. Steel, ArcelorMittal and Nucor. Tube City, founded in 1926 in McKeesport as a scrap metal dealer, is TMS' largest operating unit.

John Tumazos, a steel industry analyst with Very Independent Research in Holmdel, N.J., said he expects Pritzker will try to build TMS into a larger company that offers more services to steel mills.

“I suspect that Pritzker could inject money into this company and make it stronger,” he said.

Officials from TMS and The Pritzker Organization declined to comment beyond a written statement announcing the deal. In that statement, Tom Pritzker said, “We are delighted to have the opportunity for TPO to participate in and support the growth of the business over the long‐term.”

The company said 60 percent of its shares are held by Onex Corp., a Canadian private equity firm that purchased TMS in 2006. Onex has approved the acquisition by Pritzker, and “no additional stockholder action is required” to approve the deal, TMS said.

The deal works out to about $690 million for TMS shares and about $310 million in debt.

TMS' largest individual shareholder is former chairman and CEO Michael I. Coslov, who holds about 1.44 million shares, according to securities filings, and would receive about $25.2 million for those shares. He retired in 2009 after 48 years with the company, building it from a $60-million-a- year scrap processor to a $3 billion provider of steel services.

President and CEO Raymond S. Kalouche holds about 63,000 shares, worth about $1.1 million at the purchase price. Joseph Curtin, executive chairman, who was CEO from 2009 until December, holds 101,368 shares, worth about $1.77 million.

TMS stockholders will get $17.50 in cash for each share of their TMS Class A and Class B common stock. The price represents a 12 percent premium over the company's Friday closing stock price.

TMS, which went public in 2011, said the deal boosts returns for its shareholders and positions it to expand globally as a privately held company.

The deal, which remains subject to anti-trust approval and other closing conditions, has been approved by TMS' board and is expected to close in the fourth quarter.

The Associated Press contributed. Alex Nixon is a staff writer for Trib Total Media. Reach him at 412-320-7928 or

TribLIVE commenting policy

You are solely responsible for your comments and by using you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.