In a move that virtually could double sales volume overnight, Michigan injection molder Plastech Engineered Products Inc. plans to buy United Screw & Bolt Corp., the parent of molder Bryan Custom Plastics of Bryan, Ohio.
The two midsize automotive parts suppliers signed a letter of intent Jan. 27 to consummate the deal for $128 million in cash. Closely held United Screw, based in North Olmsted, Ohio, still must obtain approval from its 190 shareholders at a meeting tentatively scheduled for mid-March. Closing is expected by March 31.
If the transaction is completed, shareholders will receive about $130 per share of common stock, said Rex Ogg, president and chief executive officer of United Screw. The stock currently is traded at $70.50 on Nasdaq. Although the acquisition had been rumored for several weeks, the stock's price did not rise dramatically because it is so lightly traded, Ogg said.
Both companies declined to discuss combined sales figures expected after the merger. Industry sources have placed that figure at close to $300 million, which would position Plastech among the top 10 North American injection molders in Plastics News' annual sales-based rankings.
The transaction significantly will expand the capabilities of two fast-growing molders. Plastech, based in St. Clair Shores, Mich., is a privately held company that recorded $2 million in sales in 1988. It projects sales of $150 million during 1997 without the addition of United Screw.
Bryan, which last fall was named Plastics News' 1996 Processor of the Year, recorded 1996 sales of $129 million, up from $118.6 million the previous year. Bryan accounts for more than 70 percent of the company's sales, Ogg said.
Plastech spokesman Joe Emmi said no management changes are planned at United Screw, which has 1,100 employees.
Both companies have longstanding relationships to supply parts to Ford Motor Co. assembly plants. The companies also do work for other carmakers and Tier 1 suppliers. Plastech also is a major interior parts supplier to Holland, Mich.-based Prince Automotive, a division of Johnson Controls Inc.
Owner Julie Brown, a Vietnamese immigrant, bought the company from Caro Plastics Corp. in Caro, Mich., in 1988 and renamed it Plastech. A year later, she bought Dynaplast Corp., a St. Clair Shores molder, for an undisclosed amount and moved the firm's offices there. Plastech, which employs 800, is one of the nation's largest minority-owned automotive suppliers.
The firm produces louvers, fan shrouds, door handles and other small interior parts. In addition, Plastech supplies metal bumper systems for carmakers at its recently opened Strongsville, Ohio, plant. The firm's other plants are in St. Clair Shores, Caro, Grandville and Kentwood, Mich.
Besides its Bryan location, United Screw has plastic parts plants in Kenton, Tenn., and Wauseon, Ohio, that mold and assemble interior components for Big Three automakers. It also operates metal stamping plants in Grinnell, Iowa, and Cleveland.
Bryan has expanded globally. The molder purchased a 10 percent stake in 1996 in IB Autotrim of Hopkinsville, Ky., a subsidiary of Irausa Holland, which is owned by Group Antolin of Spain. The company also formed a partnership with molder Lodigiani y Leali SAIC in Villa Madero, Argentina, to supply parts to South American-based original equipment manufacturers.
The acquisition blends Plastech's expertise at custom molding smaller interior parts with Bryan's work with larger components. Plastech's plants use injection presses with clamping forces as great as 2,000 tons to mold polypropylene, ABS, thermoplastic olefins and other resins. The company also blow molds air ducting systems and water bottles for under-the-hood applications of up to 15 pounds per shot.
Bryan's equipment includes 21 presses in Wauseon with clamping forces of 65-720 tons, and an undisclosed number of presses in Bryan with clamping forces as high as 5,000 tons.
United Screw partly appealed to Plastech due to its systems integration capabilities, which Plastech currently does not possess, Emmi said.
``There's a lot of synergy between the two companies,'' Emmi said. ``It makes sense for us to diversify our business opportunities and our customer base to grow. They're involved in areas that complement our core products.''
United Screw, founded in 1930, was not considering selling the company before Plastech came forward, said Ogg, who does not anticipate difficulty gaining shareholder approval. He said the sale made sense because of carmakers' demands for value-added service and low cost.
``You have to have critical mass to support what the automotive people ask you to do,'' Ogg said.
The marriage should help both companies grow quickly by allowing them to take advantage of shared resources, said automotive consultant Donna Parolini of International Business Development Corp. in Troy, Mich.
``These are two strong companies who just got stronger,'' Parolini said. ``Sharing their resources will only help them achieve economies of scale to keep costs low. And because they both mold interior parts, they should be able to give the automakers what they want, which is systems integration.''