Structural material supplier Hexcel Corp. completed its acquisition of Ciba-Geigy Ltd.'s composites division and now faces years of organizational restructuring and plant consolidation. More than 4,500 employees are involved. Hexcel expects to ``achieve substantial savings from consolidating the company'' and ``almost doubled cash flow'' within three years, said Jeffrey Wiegand, financial analyst with Robotti & Eng in New York. ``Along the way, there will be some write-offs and nonrecurring charges to close plants.''
Laurie Haber, analyst with New Vernon Associates in Parsippany, N.J., said Ciba has retrenched in some businesses, including advanced composites, ``to narrow the management focus'' on the health-care, agrochemical and industrial chemical businesses. Ciba, based in Basel, Switzerland, owns 49.9 percent of the new Hexcel.
Composites industry analyst Benjamin Rasmussen of Watchung, N.J., anticipates a ``painful, expensive, destructive'' period for Hexcel. ``They have a lot of work ahead of them.''
The acquisition process took less than 11 months. An April phone conversation between John J. Lee, Hexcel chief executive officer, and Juergen Habermeier, Ciba composites division president, led to a July 11 letter of intent, a Sept. 29 strategic alliance agreement and a Feb. 29 closing.
Now, Lee is Hexcel's chairman and CEO, and Habermeier is president and chief operating officer.
At the Hexcel shareholders' meeting Feb. 21 in New York, Lee said the combination ``brings together two very complementary businesses.'' About 75 percent of Hexcel's sales are in the United States; 80 percent of Ciba composite sales are in Europe.
Shares of Hexcel's common stock closed at $12.50 on March 1, up from $2.13 in December 1993, when the company filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
``Much work remains to be done to achieve return on invested capital,'' Lee said. ``We need to continue diversification beyond aerospace,'' particularly in general industrial and recreational markets.
Lee said Hexcel will have a ``substantial restructuring charge in 1996 with many benefits not realized until later years.'' He said he expects a payback within three years.
Stephen Forsyth was named senior vice president of finance and administration and, with Lee, will oversee finance, human resources, corporate affairs and legal affairs.
Eight business units and activities report to Habermeier. Unit presidents are: James Koshak, U.S. materials; William Hunt, European materials; Claude Genin, fabrics; Thomas Lahey, Pacific Rim; David Tanonis, interiors; and Gary Sandercock, special processes. Michael Carpenter heads the structures unit as vice president, and Robert Petrisko was named corporate vice president of research and technology.
Consolidation has begun. By year-end 1997, Pleasanton, Calif.-based Hexcel plans to close an Anaheim, Calif., site that the Ciba composites division has used as its worldwide headquarters and U.S. materials facility. The 156 employees there were informed Feb. 6.
The company said ``phase-down'' of the Ciba facility is seen ``as an integral part of the restructuring,'' subject to approval of a new board of five Hexcel directors and five Ciba designees. Security clearance and regulatory issues remain.
The 300,000-square-foot Anaheim facility, which Ciba acquired in 1987, produces advanced composites, industrial fabrics and finished composite parts. Work will be relocated to five Hexcel plants in California, Arizona and Texas.
Hexcel operates in eight countries with facilities in the United States, Belgium, England and France. Hexcel reported profit of $2.7 million on 1995 sales of $350.2 million.
Ciba's composites division operates in more than 20 countries with facilities in England, France, Austria, the United States and Italy. Ciba composites generated 1995 sales of $331 million out of a Ciba-Geigy Ltd. total of $17.5 billion.