The former chief executive officer of Becker Group Inc. plans a return to the plastics business by buying back part of his former company.
Charles Becker is wrapping up negotiations with Johnson Controls Inc.'s automotive systems group in Plymouth, Mich., to repurchase at least five plants and two tooling shops, according to sources close to the situation and several competitors.
Becker Group of Sterling Heights, Mich., sold the plants to JCI in May. At the time, the speed and breadth of the deal stunned many industry observers.
JCI had paid about $548 million for Becker's 51 plants in North America and Europe and assumed another $372 million of debt, according to JCI's annual report, published Dec. 15. Becker Group recorded 1997 sales worldwide of about $1.3 billion.
Charles Becker and other former company officials want to buy several of those plants and the company's former tooling shops, Perfect Mold Co. and J.B. Rath Co., both based in Sterling Heights.
Sources say the plants Becker wants include injection molding facilities making automotive trim and smaller interior parts. The company's North American facilities produced such parts as door panels, center consoles, headliners and instrument panels.
JCI is likely to keep the plants that make instrument panel parts, an area where the company needs capacity, according to sources.
The sale may be completed within the next two to eight weeks, said sources familiar with the negotiations. Several competitors speculated that Becker would then become a parts supplier to JCI.
Becker recently opened an office, called Becker Ventures Inc., in Troy, Mich. Charles Becker did not return a telephone call seeking comment.
As a policy, JCI officials do not comment on speculation involving potential sales or acquisitions, said JCI spokesman Dave Roznowski.
But according to JCI's annual report, the company has identified several operations within the Becker Group that are outside JCI's core businesses. JCI plans to sell those operations in 1999, the filing stated.
In North America, Becker Group operated 14 plants with 177 injection presses. Sales in the region were about $390 million.
JCI also plans to pare down other parts of the Becker operation. The annual report stated that JCI would consolidate the Becker facilities and lay off about 1,250 workers worldwide. At the time of the sale, Becker Group had 8,400 employees.
JCI recorded a restructuring reserve of $48 million when it purchased Becker Group. Those charges were targeted for anticipated costs to consolidate Becker's plants. JCI officials did not comment on specific restructuring plans.
In December, JCI sold what had been considered another key to the deal, plastics prototyping house Megatech Engineering Inc. of Warren, Mich. MSX International Inc. of Auburn Hills, Mich., bought the former Becker plant.
Becker's father, Leonard, started Becker Group in 1954 when he opened Perfect Mold. Charles and his brother, Bruce, built up the company to world-class status, competing with better-funded megasuppliers such as Lear Corp. and Johnson Controls.
But a debt load of more than $300 million might have been the crushing blow for the family business, said Dennis Virag of Automotive Consulting Group Inc. in Ann Arbor, Mich.
``The banker was knocking,'' he said. ``It makes sense that he would want the business back now. He's an entrepreneur at heart.''
The transaction, if successful, would be a rare reversal of field for an automotive supplier who has exited the business. Even those who return seldom buy back their former plants.
But the industry should expect similar deals in an era of consolidation and critical mass, said Craig Fitzgerald, partner with investment house Plante & Moran LLP in Southfield, Mich.
More and more, companies that make major purchases find that some operations do not fit their long-term strategy and would act as a drain on finances, Fitzgerald said. Who better to sell to than the executives most familiar with those operations, he said.
``Invariably, some operations are more valuable to the company that sold it than to the buying company,'' Fitzgerald said. ``Those buyers might have to pay a premium of 20-60 percent over the price they sold the [operations] for. But it can still be a good deal for both parties.''
