Housewares molder Zag Industries Ltd. will enter new markets through a takeover by hardware giant Stanley Works of New Britain, Conn.
Stanley announced a definitive agreement to pay about $117 million in cash for 90 percent of Zag's shares. Zvi Yemini, Zag's founder, chairman and chief executive officer, will continue to hold the rest of his firm's shares. The firms expect to complete the deal by the third quarter of 1998.
Yemini said in an April 23 news release that Zag will continue in consumer markets and ``leverage [Zag's] design capabilities into the commercial and industrial markets.''
Zag, based in Rosh Ha'Ayin, Israel, has been trying to boost its presence in North America, where its customers include Home Depot, Wal-Mart, Target and Black & Decker.
One strategy was to link up with Home Products International Inc. of Chicago, but talks between the two firms broke down last fall over management and integration issues.
Early this year Zag opened a New York office as part of its North American thrust. At that time Zag USA Inc. President Joseph Janowski said the company was considering setting up U.S. manufacturing facilities.
Stanley spokesman Vance Meyer said it is too early to know how his firm and Zag will integrate their plastics operations. Stanley molds components at various plants around the world and also sources from custom molders, Meyer said in a telephone interview. Zag will operate as a Stanley subsidiary and continue to be based in Israel with its existing management.
Zag marketing director Ira Green said Zag will not change its design, manufacturing or marketing operations after the Stanley takeover.
``They're buying our innovativeness,'' Green said.
Eight facilities around the world mold for Zag, most of which are subcontractors. Green said Zag does about a quarter of its own molding. Its contract molders include one in Mexicali, Mexico, and Technoplast Industries Ltd. in Barkan, Israel. It also has a distribution center in Carteret, N.J.
Green said the deal ``is a great way for Zag to grow internationally.'' There is a small amount of overlap on some product lines but most of Zag's products are complementary to Stanley, he added.
``Zag is an ideal fit with our strategy of expanding into `near neighbor' markets that complement our tool, hardware and door products,'' John Trani, Stanley chairman and CEO, said in a news release.
``With our distribution base and Zag's speed to market and creativity, we intend to capture a significant share of the growing market for plastic storage solutions.''
Zag had sales of $63.6 million last year. It sells to nearly 60 countries but is particularly strong in Europe. Established in 1987, it launched its first product line, plastic toolboxes, in 1993. It since has diversified into hardware, sporting and leisure goods, gardening accessories, and storage products such as modular drawer systems.
Stanley, established in 1843, recorded $2.7 billion in sales last year. It has been restructuring and emphasizing product and brand development and expansion into related markets.