Josh Harris' Apollo buys slag giant Phoenix, proving there's money in scrap

An arm of Apollo Global Management, the private-company investment giant led by billionaire Sixers co-owner Josh Harris, says it has agreed to purchase Phoenix Services Inc., the 2,100-worker steel scrap, slag processing and construction materials company based in Kennett Square, Chester County, from owners led by Connecticut-based Olympus Partners.

Apollo and Olympus won't say what the buyer is paying for privately-held Phoenix, which has facilities in western Pennsylvania and across the central U.S. and in European countries, South Africa and Brazil. But estimates reported when Olympus was looking for buyers earlier this year suggest Phoenix was worth up to $900 million, almost eight times the company's $120 million in yearly earnings (before debt interest, taxes, and depreciation/amortization).

Phoenix, which had supplied road materials to PennDOT and other public agencies, was barred from seeking state or federal government business for three years. That occurred after PennDOT officials in 2014 found Phoenix had sold the state building material that was lighter than promised, and which "contained steel slag, which is prohibited in concrete cement," according to a 2015 Commonwealth Court opinion.

Phoenix counts steel manufacturers such as ArcelorMittal (which runs the former Lukens Steel plants in Coatesville and Conshohocken, among many others), U.S. Steel, Nucor and Thyssenkrupp among its clients. Apollo also is backed in part by backed by Pennsylvania pension funds