Corporate giant Tyco International Ltd. has purchased injection molder Batts Inc. in a move that swallows the competition for plastic garment hangers.
The sale merges the operations of Batts, based in Zeeland, Mich., with that of Tyco-owned A&E Products Group of North Bergen, N.J. Industry experts said A&E and Batts are two of the largest molders of plastic hangers.
The sale price was not disclosed, but outside analysts estimated the figure at about $100 million. The agreement was completed April 9 and announced to Batts employees April 12.
Two days after making the announcement, Tyco officials said that Batts' three Zeeland plants would be closed gradually during the next year, said J. Brad McGee, Tyco senior vice president for investor relations.
The shuttering affects 523 workers at those molding plants. Some workers will be offered an opportunity to move to other facilities, McGee said.
Batts has about 1,000 employees at 11 plants worldwide.
``From our point of view, some consolidation was needed to reduce redundancies in product and manufacturing processes,'' McGee said from Tyco's Exeter, N.H., administrative offices. ``A lot of companies are trying to move closer to customers, and a lot of customers for garment hangers operate offshore.''
Tyco will shift Batts' presses to other plants, most of them located outside the United States. Batts has a plant in Las Vegas, two in England, one in Germany, one in Sweden, one in Mexico and two in Hong Kong, McGee said.
No decision has been made on the status of those plants, he added.
According to a Plastics News story last year, Batts operates 97 presses with clamping forces from 50-610 tons. Company officials could not verify those figures.
The move to buy Batts and then close some plants did not surprise analysts for publicly held Tyco, based in Hamilton, Bermuda.
The sale helps Tyco dominate the market for plastic garment hangers, shift production overseas and buy resin at a better price, said equity analyst Brian Langenberg of Credit Suisse First Boston in Chicago.
``As far as closing plants, you want production where most clothes get made,'' Langenberg said. ``It makes less sense to make plastic hangers here and ship them overseas. This takes away a transportation-cost issue.''
Langenberg expects Tyco to build new molding plants in developing countries to serve customers there. Those end users include major clothing-store chains and retailers.
A&E Products operates three plants, two in the United States and one in Mexico. The company recorded an estimated $210 million in 1998 sales and has 900 employees, according to Plastics News' injection molders rankings. McGee would not confirm A&E sales numbers.
Privately held Batts recorded sales of about $135 million in 1997, the last year figures were available, said Batts family spokesman Gerald Murray.
Tyco is known to move quickly to consolidate after making purchases. The acquisition-oriented company announced plans to cut 4,000 jobs from AMP Inc. soon after completing the purchase of the electrical-connector producer earlier this year.
But the prospect of plant closings did shock the former owners of Batts, Murray said.
The 97-year-old company, formerly headed by Chairman and Chief Executive Officer John Batts, was sold to gain resources for continued growth, Murray said. The marketplace had grown increasingly competitive, he said.
``It seemed like the right time, right place and right amount (of money),'' Murray said. ``But the Batts family is totally stunned. They never thought the plants would close or they wouldn't have been in negotiations [with Tyco]. It's terrible for the employees.''
Batts family members were restrained from talking about the sale by terms of the agreement, Murray said.
Members of the family, including Jim and Bob Batts, were asked to clean out their desks after the deal was done.
Batts began injection molding plastic hangers in 1963 and also makes some wooden hangers.
A&E is managed by Tyco's plastics and adhesives division. A call to a Tyco Plastics & Adhesives official was not returned before deadline.