OWENS CORNING MAKES BID ON FIBREBOARD

Comments Email Print

Owens Corning has taken a big step toward becoming a one-stop shop for home exterior products with its offer to buy Fibreboard Corp. of Dallas.

The purchase would give Owens Corning its first in-house production capability for vinyl building products. Owens Corning currently sells vinyl window and siding products extruded by an undisclosed outside company. Fibreboard operates four siding extrusion plants, including a new operation in Joplin, Mo., which recently began production.

Toledo, Ohio-based Owens Corning on May 28 announced it will offer $55 per share for 9.5 million shares of outstanding Fibreboard stock. Under terms of the deal, Fibreboard will become a wholly owned Owens Corning subsidiary. Both companies' boards of directors already have approved the tender offer.

Outside investors seemed to approve the deal as well. Fibreboard's stock price closed at $54.31 the day the sale was announced, up from $47.50 the previous close. Owens Corning was up 50 cents to $41.63.

``It's a positive acquisition,'' Ivy Schneider, a stock analyst with Salomon Bros. of New York, said in a telephone interview. ``Fibreboard got a fair price.''

Schneider said she has not been very excited about Owens Corning stock, but was a little more optimistic about the company after the deal was announced.

``It's a good fit for them,'' she said. ``It will open new market segments for Owens Corning.''

Fibreboard, a leading extruder and distributor of vinyl siding and other building products, reported 1996 sales of $469 million. Recent acquisitions of its own could boost Fibreboard's pro forma sales to more than $800 million in 1997. If that $800 million figure turns out to be accurate, Owens Corning Chairman and Chief Executive Officer Glen Hiner will be much closer to his goal of achieving $5 billion in sales by 1999.

Owens Corning reported $3.83 billion in sales for 1996, up from $3.61 billion in 1995.

The Fibreboard deal also gives Owens Corning access to a large distribution network. Fibreboard operates about 130 distribution centers nationally.

Hiner has indicated his firm is trying to augment its traditional insulation line with ``system thinking.'' The company hopes to provide customers with building products for the ``whole project,'' spokesman William Hamilton said in a telephone interview.

``We're focusing on the envelope of the home,'' Hamilton said, noting the firm has added siding, windows, and roofing to its traditional insulation line. But even the strong Owens Corning name did not give the company an instant ``in'' to independent siding distributors, Hamilton said.

``The independents handle four lines of siding,'' he said. ``And they don't want to carry another one. We would have to go in and replace one.''

With the merger, Fibreboard's strength in the independent distributor market will complement Owens Corning's retail side.

``This makes us one of the largest manufacturers of vinyl siding,'' Hamilton said of the deal.

But he added Owens Corning still will need the help of an outside manufacturer to produce its own line of siding.

``We don't have the capacity yet'' to produce all of the firm's siding needs in-house — even with the addition of Fibreboard.

Hamilton left the door open for other possible acquisitions by Owens Corning—especially in the window lineal extrusion and door product lines—in order for the company to round out its product offerings. While Hamilton did not mention any specific direction Owens Corning would take, he said the company is ``always looking for new opportunities.''

While the Fibreboard name likely will be dropped from the corporate organization charts, its brand names — Norandex and Vytec vinyl siding and Cultured Stone synthetic masonry — will continue, Hamilton said.

Fibreboard CEO John Roach will act as a consultant to Owens Corning, but will not be involved in day-to-day operations, Hamilton said. Ron Mathewson, Fibreboard's current chief operating officer, will run the new unit.

Owens Corning's tender offer to Fibreboard stockholders will be made by June 3. The Fibreboard deal is Owens Corning's 16th acquisition since 1994.