British technical injection molder Carclo Engineering Group plc finally has taken the plunge into North America with its $25 million acquisition of Carrera Corp.
Under the deal, Carclo will buy privately owned Wood Industries Inc. of Latrobe, Pa., which operates five injection molding plants in Pennsylvania, Arizona and North Carolina.
The U.S. company, which serves the automotive, telecommunications and medical part markets, does business as Carrera Corp.
Carrera has plants at Latrobe and Export, Pa., two near Tucson, Ariz., and a newly opened facility at Wilmington, N.C. The plants operate a total of 75 injection presses, with clamping forces of 80-250 tons — similar in size to those of Carclo. The U.S. company employs 220.
The Carrera plants mold close-tolerance connectors and single-use medical-device components for original equipment manufacturers including General Motors Corp., AMP Industries and Bayer AG, according to Sheffield, England-based Carclo.
Carclo is paying an initial sum of $16 million, all in cash except for $2.5 million that will come in the form of 1.33 million new Carclo common shares.
In addition, it will pay as much as $9 million more in cash if the U.S. business achieves operating profit of at least $3.4 million this year and $3.9 million in the year ending in March 2001, according to Carclo.
For almost two years, Carclo has sought a suitable U.S. base from which to repeat the successful growth of Carclo Technical Plastics, its British custom molding division.
Carrera, formed in 1984, has grown successfully through investment by its owners, brothers Doug and Dan Wood.
But Carrera's financial performance was hit by last year's crippling General Motors strike and by heavy start-up costs incurred with the March 1998 launch of its fifth molding plant, located in Wilmington.
In 1996, Carrera recorded sales of $22 million, a figure that edged up to $27.2 million for the year ended Sept. 30.
However, profit before tax and interest charges dropped from $2.6 million in 1996 to $2 million last year.
Carrera, to be known as CTP Carrera Inc., has seen its business pick up in the six months to March and is in ``very good shape'' today, according to David Adam, Carclo finance director. He said Carclo plans to keep on the Wood brothers and other senior executives at Carrera.
He said the U.S. business is well-positioned and there is little that Carclo needs to invest in or change at this stage. Adam added that the U.S. business is smaller than Carclo's United Kingdom plastics business, and he said Carclo wants to develop its U.S. business through inside growth and acquisitions.
In a news release, Carclo said its customers in Europe increasingly have pushed the company to establish a presence in North America.
Like Carrera, Carclo molds single-use medical components, such as products used in diagnostic sample testing, at its CTP Plasro plant in Mitcham, England.
Another recent Carclo acquisition, optical plastic molder Combined Optical Industries Ltd., is set to work closely with Carrera, which manufactures connectors for fiber-optic communications.
Combined Optical of Slough, England, has been renamed CTP Coil.