Tarxien Corp.'s evolution as an automotive parts supplier could merge it into a larger custom injection molding business. Plastic and metal auto parts producer Ventra Group Inc. of Cambridge, Ontario, has made a C$38 million (US$27.9 million) offer to buy Tarxien. The deal would create a five-plant plastic auto parts molding business that would have brought in about US$120 million in business last year. Ventra's molding sales were about 60 percent of that total.
Tarxien, originally a thermoset parts producer, added thermoplastic molding several years ago. In 1995 it decided to exit thermosets and focus on thermoplastics molding and painting. During the evolution its sales bounced up and down, it closed a plant and it reorganized its business. Tarxien emerged from the transformations with several new contracts with General Motors Corp., by far its largest customer.
Tarxien itself was looking for acquisition opportunities, especially in the United States, when Ventra announced its offer. Ken Nichols, Ventra's chairman and chief executive officer, said in a telephone interview that he expects Tarxien and Ventra officials to continue to look for U.S. and other opportunities.
``You need to get to a good size to go after major contracts,'' Nichols said from Cambridge.
He estimated the combined plastics businesses of Ventra and Tarxien will have sales of C$200 million (US$147 million) next year, about half of Ventra's projected total sales.
``Tarxien had to grow one way or another,'' said Michael Gon-dosch, Tarxien vice president of finance.
He said the two companies will be a good fit.
Ventra will offer C$8 (US$5.88) in cash and two common shares in Ventra for each common share of Tarxien. It estimated in a Sept. 28 news release that the offer represented a 19 percent premium over Tarxien's recent share price. Tarxien President Ralph Zarboni and Rossiter Ventures Corp., a firm Zarboni controls, agreed to tender shares representing about 33.5 percent of Tarxien.
Ventra's Peerless Cascade Division does injection molding in Russellville, Ky., and Windsor, Ontario. Its Chatham Plastics Division has an 80,000-square-foot molding plant in Chatham, Ontario, about 20 percent smaller in floor space than each of the Peerless Cascade operations. Ventra molds interior and exterior parts for Ford and Honda assembly plants and for second-tier suppliers. It has 59 presses.
Tarxien has a molding plant at its headquarters in Ajax, Ontario, and a molding and painting operation in Concord, Ontario. Its key accounts for interior and exterior parts for Saturn cars and GM's Suburban, Yukon and Tahoe will diversify Versa's customer base.
Tarxien has several other GM contracts lined up for subsequent years and recently predicted its sales for the 1999 model year will be about C$100 million (US$73.5 million). It has 39 presses.
Tarxien's painting operation and some experience in gas-assisted molding will be new capabilities for Ventra, Nichols said. Ventra's coinjection molding and presses as large as 3,500 tons are capabilities Tarxien does not have.
Ventra has no plan to close any acquired operation, Nichols said. Ventra is running ``flat out'' and Tarxien's growing order book should soak up its unused press time next year.
Nichols estimated Ventra's sales for year-end Sept. 30 at about C$300 million (US$221 million). It has 12 plants worldwide and employs about 2,000. Metal auto parts make up most of its sales. It trades on the Toronto Stock Exchange.
Tarxien's sales last year were about US$48.1 million. For the six months ended June 30, it had sales of C$31.6 million (US$23.2 million) and profit of C$2.1 million (US$1.5 million). It also trades on the Toronto Stock Exchange. Ventra plans to mail its takeover offer Oct. 11. The deal is contingent on 90 percent or more of shares being tendered under the offer. Zarboni and Rossiter Ventures agreed not to tender their Tarxien shares to any other offer for 32 days after Ventra makes its offer.