Calnetics Corp. Chairman Clinton G. Gerlach has launched a deal that would double the company's sales to more than $50 million a year. Calnetics of Chatsworth, Calif., and privately held Richmond Holdings Inc. of Palm Springs, Calif., agreed in a letter of intent to merge Richmond, the larger firm, into a newly created subsidiary of Calnetics. The deal is subject to a definitive agreement and shareholder approvals in two to three months.
The Richmond merger would be a ``horizontal expansion'' of technologically related but noncompeting businesses, Gerlach said in a telephone interview April 17.
Richmond's wholly owned subsidiary Richmond Technology Inc. operates production facilities in Redlands, Calif., and Palm Springs. A static-control services division makes ionization, packaging and grounding products primarily for the electronics industry. Its flexible packaging services division supplies the medical, pharmaceutical and industrial markets.
Richmond had sales of $13.3 million and profit of $843,000 for the six months ended Feb. 28. Calnetics had sales of $20.6 million and profit of $629,000 for the nine months ended March 31.
Publicly traded Calnetics would issue about 3,225,000 new shares of common stock, valued at about $18.5 million April 13, and exchange them for 2,137,264 shares of Richmond common and preferred stock.
As of March 31, Calnetics had 2,914,799 common stock shares outstanding. Gerlach Holding Corp. owns 40 percent.
Richmond Chairman R. Sam Christensen is expected to become Calnetics president and a director. Gerlach, 68, is expected to remain as Calnetics board
chairman and chief executive officer.
As Calnetics chairman, president and CEO since 1988, Gerlach has pursued a strategy of growth through acquisition. The company had annual sales of $3.6 million in 1989.
Calnetics acquired irrigation-tubing extruder Agricultural Products Inc. for $4.4 million in April 1994 and brought aboard Lon Schultz, API founder and president.
Calnetics acquired custom injection molder Plastic Science Inc., now part of the Ny-Glass Plastics Inc. subsidiary, for $320,102 in June 1992 and plastic sheet manufacturer Manchester Plastics Inc. for $2 million in 1989.
Not all of Gerlach's deals have reached fruition. In 1993, Calnetics and Montana Naturals International Inc. negotiated for seven months without reaching an accord.
Observers say they respect his business acumen.
``Clint Gerlach has the ability to effectively make fair deals, and he is an excellent implementer,'' said Peter Griffith, managing director of investment banking for Wedbush Morgan Securities in Los Angeles.