California PVC and ABS pipe extruder Apache Plastics L.P. announced Sept. 19 it wants to be sold or merge with another company, a move designed to help Apache fight off competition from foreign-owned pipe firms with deep pockets. Apache President Lawrence Beasley said the company, with about $40 million in sales, is ``solidly profitable'' and will continue to operate if no deal is reached.
``There's no pressure at all to do this,'' Beasley said. ``What we're looking to do is guarantee our vigorous viability into the 21st century and see if we can get stronger in a shorter period of time.''
Apache employs 120 at pipe plants in Stockton, Lindsay and Santa Ana, Calif., making irrigation and plumbing products.
Foreign ownership of PVC pipe plants has been increasing. In July, Mitsubishi Chemical America Inc., a U.S. unit of Tokyo's Mitsubishi Chemical Corp., struck a deal to buy PW Pipe, with six West Coast PVC pipe plants. Apache also bid for PW.
``We dropped out of the bidding at $55 million, and that was nowhere close to what it went for,'' Beasley said.
No purchase price has been disclosed for the PW Pipe sale, the biggest PVC pipe deal in recent years.
``The recent industrywide trend toward consolidation and strategic partnering has made us want to review our opportunities to team up with a strategic partner,'' Beasley said. ``We will only pursue such a partnering if it would be in the best interests of our customers, employees and owners.''
Beasley said Apache needs to get bigger to compete as a mid-sized, U.S.-owned pipe extruder. He cited as major competitors three companies with deep-pocketed Japanese parents: PW; CanTex Inc. of Mineral Wells, Texas, owned by Sumitomo Corp.; and Diamond Plastics Corp. of Grand Island, Neb., owned by Mitsubishi International Corp.
Apache has hired an Oakland, Calif., investment banking firm, Eagle Partners.
