Spartech Corp. continues to expand its commodity sheet business, agreeing Dec. 21 to buy Product Components Inc. of Richmond, Indiana. The purchase price will be revealed when the deal is closed, which the companies expect by Jan. 31.
The deal gives Clayton, Mo.-based Spartech manufacturing plants in Richmond, Ind., and Clare, Mich. The company had coveted a facility in that general region, according to Spartech President Bradley Buechler.
The acquisition also helps bail Procom out of a financial mess in which it became entangled in 1992, when it stepped in to assist and later bought the assets of Liberty Industries Inc.
Procom specializes in polyolefin sheet. Spartech is a major player in markets for ABS, polycarbonate, polystyrene, acrylic and PET sheet, but holds less than 10 percent of the polyolefin sheet market.
``This is a real double positive for us, because we get the geographical location, plus a position in some products where we have not been a significant player,'' Buechler, who also is Spartech's chief executive officer, said in a Dec. 23 telephone interview.
The Procom deal allows Spartech to cancel its plan to build a plant in the region. The firm had announced in October that it would invest $3 million to build a plant in either Ohio, Indiana, Kentucky, eastern Illinois or southern Michigan.
When the deal is completed, Spartech expects to command a 20 percent share of the U.S. custom sheet market, with rigid sheet and roll-stock production capacity of more than 200 million pounds.
Spartech has annual sheet sales of about $150 million, while Procom reported about $35 million.
Claude Cason, president and sole owner of Procom, said his initial talks with Spartech involved selling only the former Liberty assets. As discussions progressed, however, both sides decided to pursue an all-encompassing sale, he said.
``We did not sell under duress, although by virtue of ongoing, Liberty-related financial distractions it was in the best interests of everybody,'' he said.
Liberty, based in Elkhart, Ind., got into trouble in 1992 when a major customer went bankrupt. Procom initially planned to form an alliance with Liberty, but the plan deteriorated and, when Society Bank Corp. foreclosed in February 1993, Cason bought Liberty's assets.
``We had so much invested - so much inertia and so many customer commitments - that I was forced to take over,'' Cason said.
But Cason was unable to work out a long-term lease on the Liberty plant, which was owned by the company's former owners. On Nov. 12, the building's owners gave Procom 45 days to move out.
``We had 72 truckloads of material to move, plus six sheet extrusion lines and support equipment,'' Cason said. ``The impact of that move caused us to seek buyers for some of the equipment.''
While Cason's health was rumored to play a factor in the decision to sell the entire business, he said it was not a serious consideration. Cason, who has Parkinson's disease, said it has not progressed to a degree where it is debilitating.
``At this point it is only a mild distraction,'' he said.
But Cason added that selling Procom will allow him to focus his full energies on a start-up business that he will retain, known as Promat. That company sells sheet and compounds made from recycled tires.
``That business has all kinds of potential'' thanks to government and rubber company efforts to encourage tire recycling, Cason said.
Cason expects Promat to keep three sheet extrusion lines from Procom's Richmond plant, and eventually to move them to another location. Promat also plans to expand its compound business, known as Prolastomer, from its current capacity of 5 million pounds annually.
Of the six extrusion lines formerly in Elkhart, one probably will go to the Clare plant, three to Richmond, and two will end up as coextrusion lines, Buechler said.
Spartech plans to retain ``most if not all'' of Procom's employees, and to add additional extrusion lines in Richmond within the next year. Buechler said Procom is expected to have a positive impact on both earnings and sales for Spartech, which is publicly traded.
Procom will not retain a separate identity, but will be folded into the parent company's Spartech Plastics segment.
Asked about Spartech's next move, Buechler said, ``We've done a preliminary analysis of the Mexican market, but that's kind of on the back burner at this stage. We'll take time to properly digest this particular transaction.''