Merger talks are off between Zag Industries Ltd. and Home Products International Inc., but Israel's Zag will continue its North American expansion into the housewares market, said a company official.
The firms announced Sept. 29 that they called off merger talks because they could not agree on plans for integration and management. Officials with both firms said talks never reached the due diligence stage and they doubted there would be future talks.
Zag of Rosh Ha'Ayin, Israel, plans to use custom molders in North America to aid its expansion, Ira Green, marketing director, said. Zag already contracts molding to an undisclosed firm in Mexicali, Mexico, and will use more custom molders as its North American sales grow.
Green could not provide a timetable of when Zag will need to enlist more molders. It now operates a distribution warehouse in Carteret, N.J.
``There are plenty of subcontractors and custom molders in the United States and it's just a matter of finding the right partner,'' he said.
Green said Zag will build up its marketing logistics in North America before it expands production here. It has appointed Joseph Janowski as director of U.S. operations, and, beginning in November, he will boost Zag's marketing to Home Depot and other major retailers. Janowski has been Zag's vice president of business development.
James Tennant, Home Products' chairman and chief executive officer, said the Sept. 18 announcement about the merger plan was ``a bit premature'' since the parties had not gotten far in their talks.
``We made the announcement because we saw unusual trading activity in the two companies,'' Tennant said in an interview from Home Products' head office in Chicago.
Green agreed with that assessment and said the trading activity suggested someone was acting on insider knowledge of the merger talks.
Tennant said his firm continues to pursue acquisitions and is ``confident of other opportunities.''
Zag and Home Products had hoped to create a company with 1997 sales of about $200 million and a network of 10 manufacturing and distribution facilities worldwide.
