The controversy surrounding M.A. Hanna Co.'s 1995 acquisition of Cimco Inc. may have ended Sept. 23 when a jury in Santa Ana, Calif., ruled in Hanna's favor in an $11 million breach of contract suit filed by former Cimco owner Russell Gilbert.
Gilbert sold Cimco, a Costa Mesa, Calif.-based molding and compounding firm, to Hanna for $34 million in December 1995. Hanna, a Cleveland-based compounding, colorant and resin distribution firm, was primarily interested in Cimco's Compounding Technologies Inc. division, which custom compounds engineering resins.
Gilbert said the deal was made with the understanding he would repurchase Cimco's custom injection molding unit from Hanna. Those negotiations broke down in February 1996 when Hanna questioned Gilbert's ability to secure financing. When the two sides were unable to agree, Gilbert stopped negotiating, a Hanna spokeswoman said last week.
Hanna then sold the molding unit to InteSys Technologies Inc. of Gilbert, Ariz., for $14.7 million. InteSys has since sold the unit's Dayton, Nev., site after auctioning off its equipment.
Gilbert, who had owned and operated Cimco for 37 years, filed suit against Hanna in March 1996 in Orange County Superior Court for promissory fraud, rescission, two complaints of breach of contract, breach of fiduciary duty and intentional infliction of emotional distress. Of those charges, only breach of contract and promissory fraud were tried in court.
In a prepared statement, John S. Pyke Jr., Hanna vice president and general counsel, said the company was ``very pleased to be vindicated by an impartial jury after a full review of the facts.''
``M.A. Hanna has completed 23 acquisitions in the past 11 years, and it has always been our intent and practice to negotiate honestly and fairly with the parties involved,'' Pyke said. ``The negotiations with Gilbert were no exception.''
The informal agreement, which Gilbert said was verbally agreed to by former Hanna Chief Executive Officer and President Martin Walker, called for Gilbert to repurchase the molding division for about $18 million. Hanna claims Gilbert soon reduced this offer to $13.6 million, of which only $3.2 million was cash.
Gilbert and his lawyers, Cormac Carney and David Krinsky, could not be reached for comment.