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October 06, 1997 02:00 AM

GEON CO. BIDS ON SYNERGISTICS

Frank Esposito
Senior Staff Reporter
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    PVC maker and compounder Geon Co. is moving to acquire Synergistics Industries Ltd., a rival Canadian compounder that has seen its value increase exponentially in less than two years.

    Geon of Avon Lake, Ohio, has offered C$22 cash per share for Synergistics' 5.3 million outstanding shares, a bid of about C$116.6 million (US$84.8 million) for the Mississauga, Ontario, company. Synergistics' shares closed Oct. 2 at C$21.85, up C$6.10 on the day.

    Synergistics, which posted sales of C$293 million (US$215.4 million) last year, was valued at only C$15 million 21 months ago when its stock stood at C$3 per share. The firm's stock closed at C$15.75 per share Wednesday on the Toronto Stock Exchange.

    ``Our stock languished in the desert for years,'' Synergistics President and Chief Executive Officer Kim Aagaard said in an Oct. 2 telephone interview from Mississauga. ``But then we adopted a more focused and aggressive management approach and got a hot agenda going.''

    Aagaard said the acquisition, which will be complete unless another bidder offers C$1 per share more than Geon's offer by Oct. 12, came as a surprise.

    ``We had dealt with Geon as a supplier and a competitor for years, but there's nothing unfriendly about this from a personal or business basis,'' Aagaard said. ``But for a bunch of people who had the wind in their sails, this takes some getting used to.''

    Geon was the leading PVC compounder in North America in 1995 with 22 percent of the market, while Synergistics placed second with 14 percent, according to Geon's 1996 fact book.

    Synergistics' sales are split evenly between Canada and the United States. The firm produces PVC compounds, as well as cross-linked polyethylene compounds, thermoplastic elastomers and plasticizers, at six locations — Orangeville and Lindsay, Ontario; Valleyfield and St. Remi, Quebec; Farmingdale, N.J.; and Conroe, Texas. Its products are used in construction materials and in a variety of consumer products such as bottles and outdoor furniture.

    Geon Chairman, President and CEO William Patient said Synergistics is ``an excellent strategic fit'' for Geon's compound business.

    ``[Synergistics] will immediately contribute to earnings growth and will progressively deliver enhanced profitability as we realize greater economies of scale,'' Patient said in a news release.

    The deal also will expand Geon's product and technology base.

    The PE compounds, TPEs and plasticizers will be Geon's first ventures into those areas. In additon, the company will control Synergistics' patented K-mixer extrusion technology for flexible and rigid PVC compounds.

    Dennis Cocco, Geon's director of corporate and investor affairs, added the move is in step with Geon's intentions to grow its compounding business.

    ``They've reduced operating costs and become more effective, and we've done the same thing,'' Cocco said.

    The deal should be complete in three to six weeks, Cocco said.

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