AmeriMark Inc. will acquire Reynolds Metals Co.'s vinyl siding extrusion and vinyl window fabrication plants, as part of a deal that comprises all of Reynolds' residential and construction products operations in the United States and Canada. The buy also gives Raleigh, N.C.-based AmeriMark, with two PVC siding, soffit and trim plants in the Southeast, a third vinyl siding extrusion plant, in Lynchburg, Va. The deal marks its entrance into vinyl window assembly, according to James R. Smith, AmeriMark's chief financial officer.
It also includes sites for manufacturing aluminum building sheet and fabricating metal. The brunt of AmeriMark's $250 million in sales are in specialty aluminum products used in residential remodeling, Smith said.
The companies announced the deal Dec. 16, and expect it to close during the first quarter 1997, at which time Reynolds will disclose financial terms, said spokeswoman Lou Anne Nabhan.
Nabhan said Reynolds, which is in the midst of assessing all its businesses, was not looking to divest its vinyl siding, soffit and trim business, which Plastics News and industry sources estimate has sales of $30 million a year. She would neither confirm the sales figure, nor disclose extrusion capacity for siding at Lynchburg.
``We were approached by AmeriMark on the transaction and came to an agreement that benefits both companies,'' she said by telephone from Reynolds' Richmond, Va., headquarters. ``The two businesses complement each other well and will have stronger prospects for growth as a single entity.''
Smith said: ``We've been looking for opportunities to expand our business, and this became available to us. It extended our reach ... in terms of market share, in terms of customer base, economies of sale.''
He noted that AmeriMark President Roger Scott and Vice President Dan Goldman both formerly worked for Reynolds, and that the companies have had a ``buy-sell relationship, primarily for aluminum,'' for some time. As part of the agreement, AmeriMark will have license to use Reynolds' trademark for five years.
At Fairbluff, N.C., and Olive Branch, Miss., AmeriMark extrudes vinyl siding and accessories. Each plant has a mixer with capacity for about 2 million vinyl squares, the equivalent of 200 million square feet, but right now only the Olive Branch facility has that much extrusion capacity. The 2-year-old Fairbluff facility can extrude more than 100 million square feet of siding, and the firm still is adding extruders there as its customer base grows, Smith said.
He put the wholesale price for vinyl squares at $40-$50. Together the plants employ as many as 400 when manufacturing peaks from March till October, according to Smith.
Reynolds' Lynchburg siding plant employs more than 100. Vinyl replacement window assembly is in Bourbon, Ind. The vinyl operations make up just a small portion of publicly held Reynolds' plastics sales; it also does an estimated $375 million in film sales annually.
The company also distributes plastic food packaging, such as deli containers, Nabhan said. Total sales for 1995 were $7.25 billion, mainly for metal products.
In October the company began a review of its businesses, with the help of its investment bankers, to arrive at a plan targeted at improving corporate performance. That review should be completed by mid-1997, she said.
Smith said AmeriMark had looked at other opportunities, but he would not say whether it had considered Ply Gem Industries Inc. of New York, which was taken off the selling block in July, after a year spent searching for a buyer.
Ply Gem's $700 million building products business includes extruded PVC siding and fabricated vinyl windows — markets that have seen considerable activity in the past two years.
``The smaller players are being acquired by those that are better-positioned,'' Smith said. ``A lot of the independents are disappearing.''
Last year ABT Building Products Corp. bought the BPCO Inc. Vinyl Siding Division of Emco Ltd. in Acton, Ontario. Also last year, Toronto-based Jannock Ltd. bought Bird Corp.'s U.S. siding extrusion and window fabrication businesses. Then Fibreboard Corp. acquired Canadian siding maker Vytec Corp., plus launched plans for a new siding plant in Joplin, Mo., slated to open by mid-1997. This month Fibreboard, based in Walnut Creek, Calif., announced it will boost its fabricated vinyl windows business by buying Cleveland-based Gentek Building Products.
For AmeriMark, entering vinyl window fabrication is something the company had considered in the past.
``It's certainly a growing segment of the market,'' Smith said.