LONDON — Custom injection molder SPM Inc. is being acquired as part of a £322 million ($528 million) management buyout backed by British venture capitalist Cinven.
In the cash deal, SPM of Anaheim, Calif., and sister firm metal die-caster Dynacast are being sold by London-based textile and engineering firm Coats Viyella plc.
SPM and Dynacast form Coats Viyella's precision engineering division Dynacast International Ltd. of Alcester, England. Coats Viyella had revealed in December that it was in talks with several potential bidders for the division.
The takeover, which still awaits approval from Coats Viyella's shareholders, should close in April, according to Dynacast International's strategy director Tim Hayter.
Cinven, which aims to be the lead investor in medium-to-large European management buyouts, has led transactions totaling some £7 billion ($11.4 billion) over the last five years.
In this case, it is supporting a management team led by David Speirs, Dynacast International's chairman and chief executive officer, and Jim McLean, its finance director, according to Cinven.
While executives are tight-lipped about details, they suggest that SPM will benefit and grow as a result of the acquisition, which will provide new capital for fresh expansion.
``All the team at Dynacast are looking forward to working with Cinven to develop the business. We are confident that we are well-placed to exploit the considerable opportunities in our markets,'' Speirs said.
Cinven director Brian Linden cited ``exciting opportunities'' to accelerate growth and for his firm to help fund both organic and acquisition growth at Dynacast.
Today, SPM's 380 injection presses do everything from micromolding to jobs requiring 1,100 tons of clamping force. SPM has eight U.S. plants, one in Puerto Rico, two in Canada and two in Mexico, said Tom Bramblett, SPM's business development vice president, in a Feb. 18 telephone interview from his office in Raleigh, N.C.
The firm also molds at plants in Malacca, Malaysia, and Mountain Ash, Wales.
SPM's North American injection molding plants are in Anaheim and Fremont, Calif.; El Paso and Houston, Texas; Hickory and Conover, N.C.; Minneapolis, Minn.; Hillsboro, Ore.; Calgary, Alberta; Montreal; Arecibo, Puerto Rico; and Guadalajara and Apodaca, Mexico.
The company uses mainly engineering resins to mold a wide range of precision plastic components, primarily for the computer and telecommunications markets, though it also serves the automotive, consumer electronics and medical sectors.
SPM's global customers include Compaq Computer Corp., Dell Computer Corp., Ford Motor Co., Ericsson Inc., Northern Telecom Ltd., Motorola Inc. and Gillette Co.
Today, about 70 percent of SPM's overall sales of molded precision plastic components are made in North America.
Together, the die-casting and plastics businesses achieved a pretax profit of £34 million ($56 million) in 1997, 40 percent of it from plastics molding, on sales of £300 million ($492 million), according to Cinven.
Dynacast, with 6,000 employees and 37 plants in 19 countries, has made substantial capital investment, modernizing plants and raising capacity in the past few years. However, SPM has suffered, along with other custom molders, from the effects of recent global economic crises on major clients, especially in the telecommunications and consumer electronics fields.
Reporting its 1998 first-half results, Coats Viyella confirmed plastics remained ``difficult.''
The parent company blamed ``high market volatility'' exacerbated by the Asian crisis, and reported that first-half profit for its precision engineering division fell by $7.9 million, to $25 million.
Hayter confirmed that while automotive remains a steady market for SPM, recent months had seen volatility among telecommunications and consumer electronics clientele. He said that in cases where a plant has experienced slower business, the load across the SPM production network is being smoothed by switching work from other facilities with too much work.
He said that Dynacast sees plenty of opportunities for growth, including expansion geographically, mimicking the wide global spread of the division's die-casting operations.