Two major U.S. suppliers to pre-manufactured housing and recreational vehicle markets plan to merge. Through the deal with Shelter Components Corp., Kevco Inc. will gain plastics manufacturing.
Shelter Components of Elkhart, Ind., has three plastics processing subsidiaries. Duo-Form of Michigan Inc. of Edwardsburg, Mich., and Better Bath Components Inc. of Waxahachie, Texas, thermoform components for pre-manufactured housing and recreational vehicles. Plastics Solutions Inc., which Shelter Components bought in the summer, is a South Bend, Ind., injection molding division of Duo-Form.
Jerry Kimmel, Kevco chairman, president and chief executive officer, said plastics are one of the attractions of Shelter Components and he hopes to expand that business.
In a telephone interview from Kevco's Fort Worth, Texas, head office, Kimmel said the two companies are complementary and compete in some pre-manufactured housing markets.
Kevco makes wood trusses at five plants and will open two more truss plants early next year. Shelter Components will be its fourth acquisition in the past few years.
Kevco agreed to pay $17.50 cash per share for Shelter Components' 7.8 million shares.
The deal is contingent on Kevco receiving a majority of shares and on regulatory approvals and completion of financing.
Kimmel said the companies are targeting early December for finalizing the deal.
Shelter Components distributes hardware, doors, siding, vinyl windows, plumbing and other products. It had sales of $446 million last year, including $47 million for its thermoformed products, and profit of $7.7 million. Kevco distributes plumbing fixtures, wood products and similar components and logged sales of $267 million last year. Kimmel predicts Kevco's sales will reach $370 million this year.
Shelter Components plans to expand Plastics Solutions' product line to include plumbing-related components such as sinks and valves, said Mark Neilson, Shelter Components chief financial officer. The South Bend operation, however, will continue in its traditional recreational, automotive and medical markets. Plastics Solutions had sales of about $8 million in 1996. Shelter Components paid $6.6 million for the firm in cash, long-term notes and assumed liabilities.
Kimmel said he founded Kevco in 1964. It trades on Nasdaq and Shelter Components trades on the American Stock Exchange.