Selling controlling interest is meant to help bring jobs.
San Angelo Standard Times (May 19, 2006)
Paul A. Anthony
A Dallas-area investment company has purchased a controlling interest in Hirschfeld Steel, a move executives said will help the Steel fabricator bring more jobs to its Texas operations.
Hirschfeld and Insight Equity, based in Southlake, completed the transaction April 27 after months of discussion, Chief Executive Officer Dennis Hirschfeld said.
“Insight brings a lot of managerial skills,” Hirschfeld said. “That’s a big plus for us. They don’t really want to get too much into the operations end of it.”
Insight, which uses its $300 million equity fund to purchase and invest in companies it wants to grow, will manage Hirschfeld’s financial affairs from Southlake, Hirschfeld said, but the company’s operations and headquarters will remain based in San Angelo.
The move will change little about the face of the company locally, he said, except to provide greater financial flexibility to add jobs and projects.
Hirschfeld Steel, headquartered at 112 W. 29th St., employs about 900 people across its nationwide operation, with about 250 employed in San Angelo.
“This is a move that we made, the family made,” said Hirschfeld, whose father, L.W. Hirschfeld, founded the business in San Angelo in 1946. “We look at this as a 50-50 partnership.”
Hirschfeld Steel is one of the country’s largest Steel-fabrication companies, providing structural Steel for such projects as Minute Maid Park, the Houston Astros’ stadium, and Heinz Field, home of the Pittsburgh Steelers, and bridge Steel for highways such as the Dallas-area George Bush Turnpike.
Its local plants — which cover about 750,000 square feet in North San Angelo — manufacture and ship the Steel beams used in such projects. They also provide Steel and metal for purchase in smaller projects, such as metal buildings.
Because Hirschfeld Steel and Insight Equity are privately owned companies, both sides declined to release the terms of the agreement, although Dennis Hirschfeld said Insight owns a controlling share of the company. Insight CEO Ted Beneski said the shares are “about equal.”
Hirschfeld Steel did not pay Insight to take over a portion of the company, Dennis Hirschfeld said. Rather, Insight brings its money into the new company, expecting a payout on its investment years later.
“The goal really is to invest in companies that offer a strong opportunity for improvement,” said Beneski, who as Insight CEO will take over as chairman of Hirschfeld’s five-member board. “We think Hirschfeld is a terrific opportunity.”
The board now is made up of three Insight executives, Dennis Hirschfeld and former board chairman Dal DeWees.
Although Insight has been described as a company that invests in and rejuvenates struggling companies, Hirschfeld said such is not the case with this transaction.
“They looked at us as the market leader, and that’s what got them interested,” he said. “They absolutely would not have invested if we were in a weak position.”
A downturn in the Steel industry, followed by the Sept. 11, 2001, terrorist attacks, forced the company to shift operations to Abilene in 2004 and close its main fabrication plant in San Angelo.
The industry’s prospects have grown brighter in recent months, however, as evidenced by the reopening of that plant in December.
Hirschfeld Steel approached Insight in December with the proposed acquisition, seeing the infusion of money such a deal would bring as a way to better take advantage of expected growth in the Steel industry — in part caused by bridge projects written into the 2004 federal transportation bill passed by Congress.
Already, Dennis Hirschfeld said, the Insight acquisition has erased much of his company’s debt and cleared the way for a 75,000-square-foot expansion to be built in San Angelo later this year. The company plans to add 50 jobs across its Texas operations in San Angelo, Abilene and Midland, Hirschfeld said, and expects to add more as projects continue.
“We’re in expansion mode,” DeWees said, “and that’s what excites us.”
Standard-Times file photo by LAKEITH KENNEDY
In 2000, Hirschfeld Steel workers fabricated Steel columns used to build Reliant Stadium, home of the NFL’s Houston Texans. Hirschfeld has sold a controlling interest to Insight Equity of Southlake in an effort to infuse the San Angelo-based company with more cash and grow the operation.