Spartech Corp. of Clayton, Mo., has made an aggressive move to grow its compounding and color concentrate business by acquiring Polycom Huntsman Inc. of Washington, Pa., in a deal valued at $135 million.
Spartech, the leading sheet producer in North America, with $357.9 million in sales in fiscal 1996, now adds Polycom Huntsman's eight U.S. plants and one European plant to its lineup of five color and compound plants in the United States and Canada.
Polycom Huntsman's 500 million pounds of compounding capacity produced sales estimated at $115 million for fiscal 1997. Spartech's 1997 compounding sales from 115 million pounds of production are estimated to be $84 million.
The transaction, which should be wrapped up by March 31, will boost Spartech's total sales to $690 million.
``We had a strategic plan to grow our color and specialty compounds group, and when Polycom Huntsman came along it was a great fit,'' Bradley Buechler, Spartech president and chief executive officer, said in a Feb. 2 telephone interview.
Polycom Huntsman President Ralph Andy said his company ``had several alternatives to carry our business forward in the future, including a public offering and strategic sale.''
``[Selling to Spartech] fit what we were looking for in a strategic sale,'' said Andy, who founded the business in 1977.
``The combined group will be a lot larger and will benefit our shareholders.''
Polycom Huntsman's 430 employees will be unaffected by the move, the company said. Andy will leave the company to pursue other interests but will be named to Spartech's board of directors. He also will continue to serve Spartech as a consultant. Polycom Huntsman Vice President George Abd will become vice president of Spartech's compounding and color operations.
More than half of Polycom Huntsman's compounds are based on polypropylene, while others are based on ABS and polyethylene.
Spartech's concentration in the sheet area had led the company to focus on ABS, PS and PE compounds.
``We hadn't been significant in polypropylene,'' Buechler said. ``This is a great opportunity for us to build in consumer electronics, small appliances and automotive markets.''
The sale was not sparked by Huntsman Corp.'s announced intentions to reduce its involvement in the commodity chemicals industry, according to Andy.
Salt Lake City-based Huntsman acquired 50 percent of what then was Polycom Inc. in 1985.
``This was an independent decision,'' Andy said. ``Huntsman will support whatever direction we go in, but they weren't pushing this transaction by any means.''
Huntsman spokesman Don Olsen said the sale was part of the company's overall business review.
``We've established a strategy of looking closely at all of our businesses,'' Olsen said. ``And if we find a fair market value, we'll look at divestiture.''
Spartech now assumes control of a company that last year saw a 15 percent jump in sales and added 105 million pounds of capacity by opening a facility in Lake Charles, La., and expanding its Donora, Pa., site.
Spartech, which has made seven substantial plastics acquisitions since 1993, will continue to seek expansion in the compounding and colorants areas, Buechler said.
``There's been overall consolidation in a lot of different markets,'' he said. ``We did a fair amount in sheet and there's a similar trend in all processing functions.''
Overall, Spartech placed 12th in Plastics News' 1997 ranking of North American film and sheet manufacturers, with $369 million in related sales.