Success Stories
Acquisition of a Private Company Owned by a Founding Family
Partnership with Proven Management
Exit Via Strategic Sale
Based in Windsor, Ontario, and established in 1914 as a family-owned and operated business, Zalev Metals collects, processes and supplies recycled ferrous and non-ferrous metals for the North American steel and automotive industries. In 1996, when CAI encountered Zalev, it was Canada's second largest metals recycler and was still family-owned and operated.
In the mid 1990's, the construction of many new steel mini-mills in North America created a new challenge for Zalev and other players in the scrap steel industry. The mini-mills and other purchasers of scrap steel were looking to partner with fewer suppliers who could serve a greater proportion of their scrap steel needs. Historically, the industry had been dominated by smaller, family-owned businesses, few of which had sufficient capacity to meet increased market demands on a cost-effective basis. As a result, industry players began to consolidate regionally.
CAI was impressed with the quality of management at Zalev and their in-depth understanding of the business. After a series of discussions, CAI and Zalev agreed on a strategy to consolidate the scrap steel recycling industry in the Detroit/Windsor market area. The consolidation was expected to make Zalev the largest and lowest-cost metals recycler in its marketplace. In 1996, CAI acquired a majority interest in Zalev. Senior management continued to own a significant interest, and received options under a new incentive stock option program.
Following the investment, CAI and Zalev met with a large number of metals recyclers competing in Zalev's marketplace to discuss potential business partnerships. In the meantime, new capital spending enabled Zalev to process scrap metals more efficiently, making the Company a key player in the accelerating regional consolidation and increasing its attractiveness to strategic buyers. As prices of consolidation targets increased, CAI and Zalev switched from a consolidation to a combination strategy. Discussions between CAI, Zalev management, and strategic buyers led to the successful sale of Zalev in 1998.
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Zalev Metals Inc.
Acquisition of a Private Company Owned by a Founding Family
Partnership with Proven Management
Exit Via Strategic Sale