TORONTO — Versatech Industries Inc. of Toronto plans to acquire more auto plastic part molding operations and is merging with Gecamex Technologies Inc. to facilitate its expansion.
Versatech announced May 6 that it and Gecamex of Leamington, Ontario, agreed in principle to merge by the end of the third quarter. Gecamex director Ian Macdonald said by telephone that the merger will help Versa-tech's plan to add about C$100 million (US$72 million) in annual plastic molding sales through U.S. or Canadian acquisitions in 1997.
Versatech currently owns about 80 percent of Gecamex on a fully diluted basis.
While the merger proceeds, Versatech's ownership is changing. A trust for Jack Lee, Versatech chairman and chief executive officer, agreed to sell its controlling interest in Versatech to Trilee Corp. Trilee's owners are Jack Lee's son Rob Lee, and Tricapital Management Ltd. of Toronto, a merchant banking firm that has advised Versatech and Gecamex in past deals. Macdonald is a partner in Tricapital.
Macdonald said the merger will streamline management, give Versatech more access to capital markets, and eliminate legal hurdles preventing full integration of Versatech's operations in Canada and the United States with those of Gecamex, which are based mainly in Canada. It also will eliminate customer confusion about Versatech's various subsidiaries and affiliates.
As an example, Macdonald said the merger will make it easier to integrate Versatech's Hi-Craft Engineering subsidiary, a Fraser, Mich., custom injection molder and mold maker, with Ajax, Ontario-based custom injection molder Tarxien, which Gecamex acquired late last year.
The merged company, tentatively called Versatech Group of Cos., will have more flexibility to make acquisitions on both sides of the border, Macdonald predicted. He said officials are in talks now about purchasing firms but he would provide no details.
Versatech Group will seek listings on the Toronto Stock Exchange and Nasdaq. Gecamex now trades on the TSE and Versatech on Nasdaq.
Gecamex significantly boosted its custom automotive parts molding capacity last year after a prolonged takeover battle for Tarxien Corp., which had sales of about C$60 million (US$43.2 million) last year. Versatech's main molding subsidiary, Hi-Craft, does roughly C$30 million (US$21.6 million) in business a year, Macdonald said. He estimated the combined companies' sales last year at about C$210 million (US$151.2 million).