LDM Technologies Inc. has purchased injection molder Huron Plastics Group Inc. in a move that significantly adds to LDM's growing cache of automotive products.
The acquisition, for $65.1 million in cash and the assumption of certain liabilities, was LDM's largest in a litany of acquisitions during the past year. The stock purchase includes six injection molding plants owned by Huron, based in St. Clair, Mich., and hands LDM a more prominent position in the production of under-the-hood auto components.
For Huron, the Feb. 6 purchase ends months of speculation concerning the molder's future. In August, auto supplier Cambridge Industries Inc. of Madison Heights, Mich., signed a letter of intent to buy Huron. The company later backed away when the sides couldn't agree on price, according to Cambridge officials.
In LDM's case, the sale was clinched partly because the two companies decided they could work well together, said LDM Chief Financial Officer Gary Borushko. As with many midsize suppliers, Huron had explored sale opportunities, he said.
``Many [auto] suppliers in that $100 million sales range or less are probably talking to someone,'' said Borushko of LDM, based in Auburn Hills, Mich. ``Why not explore the field when business is heading toward bigger companies? The key element of the transition is that the companies feel comfortable with each other.''
With the sale, Huron management will be retained, as will the firm's 1,000 employees, Borushko said. The supplier, about a fifth the size of LDM, will keep its name and become a working division of the larger company.
LDM continues on its jagged growth path by absorbing companies that swell its product lines. The Huron sale adds heft to LDM's line of under-the-hood parts, which had been a weaker link for the supplier, he said.
Before now, LDM primarily was known for its interior trim and climate-control parts. The buyout places the company firmly into diverse commodities, said auto consultant Donna Parolini of International Business Development Corp. in Troy, Mich.
``They are moving in an interesting direction,'' Parolini said. ``[The Huron acquisition] is a strategic purchase that fills out product areas, instead of a global purchase that gives them more worldwide presence in one product. It's a good way to grow, because it spreads the risk instead of having one product absorb it all.''
Borushko said LDM wanted to explore opportunities in under-the-hood parts, including air induction and powertrain components. The competitive base for those products is not as broad or sophisticated as that for interior products, he said.
``We're not running around buying injection molding plants unless they add quite a bit to the overall organization,'' Borushko said. ``Our acquisitions are very selected, and this happened to fit well.''
Huron molds precision, niche parts that include battery trays, air-flow sensor housings, water-inlet and thermostat housings, water-plug front covers and air-conditioning covers for tube assemblies.
The thermoplastic molder has five plants in the Port Huron, Mich., area northeast of Detroit, and a plant in Harlingen, Texas, operated by its Tadim Inc. subsidiary. The plants have a total of 121 presses, Borushko said. Tonnage figures were unavailable.
The company, which sells products both to Big Three automakers and several Tier 1 suppliers, also uses some specialized processes such as two-shot molding and insert molding for its engineered components.
Huron recorded $88.1 million in sales and $800,000 in profit for its fiscal year ended March 31. The molder ranked 61st on Plastics News' most recent list of North American injection molders. Huron President Arthur Goodsel declined comment.
LDM now has 25 plants and 4,600 employees. Within the past 13 months, the company has purchased injection molder Molmec Inc. of Walled Lake, Mich., for $55.9 million and blow molder Kenco Plastics Inc. of Farmington Hills, Mich., for $27.1 million.
In addition, the company bought two interior trim plants from Maumee, Ohio-based Aeroquip-Vickers Inc. The plants, in Kendallville, Ind., and Beienheim, Germany, were purchased for a combined $14.9 million.
Including the Huron purchase, LDM recorded $521.2 million in pro forma sales for 1997 and $4 million in profit. The supplier placed eighth on Plastics News' list of North American injection molders for 1996.