Pittsburgh Business Times
Investor wants `win' for MetalSite
Internet Capital Group buys stake for $180 million
Ethan Lott
FINDLAY TOWNSHIP -- The founding parent of MetalSite, Weirton Steel Corp., has sold a large chunk of the company to a new parent who brings a track record of business-to-business online successes.
Internet Capital Group Inc. paid $180 million for the 44 percent stake in MetalSite and hopes to push MetalSite over the top.
"Our strategy is about helping our companies execute faster. We're going to help them," said ICG managing partner Doug Alexander. "We think there is a big market and we think the market leader will be at an advantage. We want to help them win."
MetalSite officials think they got what the company needs -- a partner that is a darling on Wall Street for its ability to incubate strong performing business-to-business Internet firms.
ICG, based in Wayne in suburban Philadelphia, has stakes in several such companies, including e-Chemicals Inc., VerticalNet Inc., PaperExchange.com and USgift.com Corp. ICG bought into VerticalNet early and it went public last year and now has a market capitalization of more than $5 billion. Mr. Alexander is chairman of VerticalNet. ICG had one of the most successful IPOs of 1999, soaring from $14 a share in August to close the year at $170, including a 2-for-1 split.
"If you look at ICG, they are the leader in (business-to-business) e-commerce," MetalSite CEO Patrick Stewart said. "It brings a whole new focus to our board and to our company."
MetalSite was formed in 1998 as a marketplace for buying and selling steel online, making its first transaction Dec. 7, 1998. The company started with 12 employees and now has about 55. MetalSite does not disclose its revenues.
Mr. Alexander and Walter Buckley III, ICG's president and CEO, are taking seats on MetalSite's board of directors, bringing diverse experience in the young Internet business-to-business market to MetalSite.
Mr. Stewart said the decision by Mr. Buckley, an ICG co-founder, to take a MetalSite board seat demonstrates how seriously ICG is taking its investment in MetalSite's future.
Mr. Alexander said ICG had identified 50 markets that it wants to penetrate and steel is one in part because of its sheer size. He said MetalSite will benefit by taking advantage of ICG's services and networks. For instance, ICG has recruiting services to help find key management and a technology group that can assure MetalSite is utilizing the best available technology.
Mr. Stewart said all ICG's business-to-business companies will be able to work together and learn from one another.
"I can sit with the paper people or plastics people and we can have discussions about how we can be better b-to-b companies," Mr. Stewart said. "(MetalSite) and PaperExchange can develop a banking program together. It's going to help us have a banking program faster."
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