Construction products major Jannock Ltd. plans to diversify into corrugated high density polyethylene pipe by acquiring Big `O' Inc. of Exeter, Ontario.
Big `O' had sales last year of about C$30 million (US$21 million) and was profitable, according to Brian Jamieson, vice president of finance for Toronto-based Jannock. His firm agreed to pay about C$13 million (US$9.1 million) and assume about C$10 million (US$7 million) of Big `O's debt. Jannock will pay with a combination of cash and as much as 450,000 common shares of its own stock.
Big `O' has five Ontario plants, in Exeter, Forest, Orangeville, Woodstock and Chesterville. Jannock said it is Canada's leading producer of corrugated HDPE pipe for agriculture and infrastructure markets. Big `O' President Grant Kime said the deal includes his firm's 25 percent stake in Polytubes B.C. Inc., a corrugated HDPE pipe producer in Abbotsford, British Columbia.
Jamieson said Big `O' has sold little in U.S. markets but Jannock sees opportunity to expand sales there. Jannock, a major vinyl siding producer, already makes corrugated steel pipe for road drainage and agricultural markets through its Jenisys Engineered Products business in its metal group.
``By combining Big `O' with Jenisys' expertise and reputation in the infrastructure and agricultural markets, and its national distribution channels, we anticipate that we can help this business achieve substantial growth in Canada and the United States,'' R. Jay Atkinson, Jannock president and chief executive officer, noted in a news release.
Big `O' has developed technology, equipment and tooling to make and assemble corrugated pipe, and Jannock will be able to exploit that in North America and in offshore developing countries expanding their infrastructures.
Kime established Big `O' in 1967 and expanded it to several plants across Canada. A few years ago the firm closed some plants and Big `O' turned its Abbotsford facility into a joint venture now called Polytubes B.C. Kime said it was difficult to raise capital for growth and Jannock expressed an interest in buying the whole company.
The sale ``will be the best thing for all stakeholders, including employees and customers,'' said Kime, who will become chairman of Big `O' once Jannock owns it. Jannock expects to close the deal by the end of January.
Jannock had sales of C$1.2 billion (US$840 million) in 1996. Its metal, vinyl and brick groups run 65 plants across North America. It reported profile extrusion sales of US$261 million in 1996, making it the sixth-largest pipe, profile and tubing firm in Plastics News' ranking last year.