North America's largest plastic sheet extruder, Spartech Corp., plans to expand again through acquisition. The Clayton, Mo., firm announced Jan. 23 that it signed a letter of intent to buy the shares of sheet extruder and thermoformer Portage Industries Corp. for $16.5 million.
Portage, with annual sales of about $35 million, runs two sheet extrusion and light-gauge thermoforming plants in Portage, Wis.
Portage wasted little time finding a likely buyer after it announced Dec. 11 it might be for sale. The firm's president, Anthony Lisauskas, said in a Jan. 24 interview that a dozen companies contacted Portage and several of those submitted bids. Spartech indicated an interest in Portage shortly after the Dec. 11 announcement but said it was not in negotiations at that time.
Spartech President Bradley Buechler said Jan. 23 by telephone that his firm plans to put more equipment and capital into Portage over the next 12 to 18 months, but he declined to elaborate. He said Portage's packaging products business is especially attractive since it complements Spartech's heavier-gauge transportation, consumer and industrial products.
Spartech offered $6.60 per Portage share in its agreement. Lisauskas said Portage has about 2.5 million shares and options convertible to shares. For the nine months ended Oct. 1 it had profit of $394,000 on sales of $25.8 million. The two parties plan a definitive agreement within 30 days and hope to conclude the sale by May 1. Spartech said it hopes to retain key personnel.
Lisauskas said: ``If we come to an agreement, then I'll stay.''
Portage competitor Pace Industries Inc. of Reedsburg, Wis., said it did not know Spartech's plans for Portage but it was not worried about the deal. ``We're not really concerned,'' said the firm's president, David Pace.
Pace said his company is used to competition, including Portage. He said sheet markets are ``fair to middling.'' Pace added the market could use some stimulation that would occur if the federal government settles its budget squabbles.
Spartech estimated Portage will boost its annual sales to more than $400 million. Last year it had sales of $352 million and profit of $14.5 million. Sheet production at its 10 plants accounts for the bulk of its sales. Last year it ranked number one in Plastics News' North American sheet extruders with 1994 sheet sales of $262.9 million.
Portage will boost Spartech's production capacity to more than 450 million pounds per year. Buechler said sheet production accounts for about 280 million pounds of Spartech's current annual 375 million pounds of production, with the rest being alloys, compounds and color concentrates.
Buechler said Spartech plans further expansion and a stock issue this year, although integrating Portage will be its focus for several months. It will pay for Portage under an unsecured credit facility and expects its debt-to-equity ratio to remain less than 1:1.
Portage custom extrudes heavy- and light-gauge sheet but got out of heavy-gauge thermoforming in 1993 as it reorganized to regain profitability. It has seven extrusion lines and two light-gauge thermoforming lines. Allstate Venture Capital owns about 20 percent of Portage's shares, which trade on the American Stock Exchange.
On Jan. 24, Spartech stock closed at $7 per share, and Portage shares closed at $6..