Rotonics Manufacturing Inc., a leading U.S. rotational molder, said March 4 it has signed a letter of intent to buy Miami-based Rotocast International Inc. in a deal valued at $5 million.
Once completed, the acquisition will place Rotonics among the top three North American rotomolders in annual sales, as ranked by Plastics News.
``It should put us in the $50 million range,'' said Sherman McKinniss, president and chief executive officer of Gardena, Calif.-based Rotonics.
For its fiscal year ended June 30, Rotonics reported $39 million in sales. Rotocast had sales of about $10.2 million last year, according to a Rotonics news release.
McKinniss said in a March 4 telephone interview that he expects no problems in executing a definitive agreement, or in obtaining regulatory and company approval.
``Everyone [in management] is staying at Rotocast,'' McKinniss said. ``We're just going to try to grow the companies.''
He said the Rotocast name also will be retained because of its brand identity.
Though both organizations serve some of the same markets, ``We don't overlap that much,'' McKinniss noted.
Stephen Copeland, president of Akron, Ohio-based compounder Jerico Plastics Industries Inc., which serves the rotomolding industry, said the deal looks positive for several reasons.
``It gives [Rotonics] more capacity in the Southeast. [The company] now pretty well has got the whole United States covered,'' Copeland said.
He added that retaining Rotocast Chairman Bob Grossman and Tom Schidel, executive vice president, is a plus because both men are strong managers and well-respected in the industry.
Copeland also pointed out that Rotocast's line of proprietary products makes Rotonics more diversified.
McKinniss established Rotonics in 1973.
Rotocast employs 475 at eight plants in seven states. The firm produces agricultural, marine, residential and industrial products on 46 rotomolding machines.
Founded in 1967 by Grossman, Rotocast maintains 18 machines and employs 136 at factories in Miami; Knoxville, Tenn.; Brownwood, Texas; Las Vegas; and Bossier City, La.
The company sells proprietary products into the agricultural, marine, commercial and residential markets.
The firm also operates an injection molding plant in Miami.
In an unrelated matter, Rotonics has agreed to what it described in Securities and Exchange Commission documents as an amicable out-of-court settlement to end a legal dispute with Bonar Plastics Inc. of Newnan, Ga., over a failed attempt by Bonar's parent company to acquire Rotonics in 1996.
Dundee, Scotland-based Low & Bonar plc sued Rotonics for more than $7 million in damages after the latter broke off negotiations, announcing that an unidentified firm was interested in buying it for a higher price than that proposed by Bonar. Rotonics countersued, seeking damages of $25.2 million.
Rotonics' $750,000 payment to Bonar resulted in both companies dropping their actions, according to SEC documents.
