CLEVELAND — Following failed negotiation attempts, Eagle Pacific Industries Inc. terminated its pending acquisition of Lamson & Sessions Co.'s PVC pipe business and a Condea Vista resin manufacturing facility.
The deals, which were to close early next month, fell through April 19 after Lamson and Eagle officials could not agree on terms and conditions for that transaction. Eagle Chief Executive Officer William Spell refused to disclose details in an April 22 telephone interview.
``As you go through a deal, there's certain things that have to happen along the way. It was clear we weren't going to agree,'' he said.
Lamson President John Schulze said his firm was surprised when Eagle wanted to terminate the deal.
At an April 23 shareholders meeting in Cleveland, Schulze said: ``Obviously I'm disappointed. We really felt this was going to go forward and close.''
He would not comment on whether Eagle's pullout amounted to a breach of contract.
Eagle had announced in December it would pay $45 million in cash and issue $6 million in notes and 785,000 of its common stock shares for Lamson's PVC pipe business, which included four manufacturing plants in Florida, Pennsylvania, California and Oklahoma.
That same day, Minneapolis-based Eagle had announced a merger agreement with Condea Vista Co. of Houston, to take over its resin manufacturing plant in Oklahoma City, which would have allowed Eagle to supply its own resin for its new pipe-making facilities.
The two deals would have worked hand in hand. So when the Eagle deal crashed, the Condea Vista merger followed, Spell said.
``There was no point in doing the Condea Vista deal. It was a casualty of the Lamson deal,'' he said, adding that resin manufacturing is no longer of interest to Eagle without the pipe business.
Bowing out of the pipe business would have enabled Lamson to focus on its electrical and telecommunications industries.
As recent as its 1998 annual report, released to Lamson shareholders in March, Schulze touted the sale of the pipe business, describing it as a ``vital, strategic initiative'' that would allow the firm to grow in other areas. He reiterated that plan at the April 23 meeting, saying Lamson must sell its PVC pipe business to recoup shareholders' value.
``We will continue to reduce our exposure to PVC resin pricing,'' he said.
He added that Lamson cannot compete with large Asian chemical makers Sumitomo Corp. and Mitsubishi Chemical Corp., which earlier this decade acquired PVC pipe extruders CanTex Inc. and Pacific Western Extruded Plastics Co., respectively.
Cleveland-based Lamson has struggled since 1995 with steadily decreasing sales. The company reported $299 million in sales that year, while 1998 sales reached only $270 million. However, profit increased significantly in 1998, topping off at $6.7 million, before an accounting change. Lamson suffered a loss of $4.7 million in 1997.
Schulze said Lamson will renew negotiations with parties that were interested suitors before Eagle stepped up to the plate, but he would not comment on who they are.
``We continue to believe that the long-term success of this business would be better served by being owned by a company involved in the polyvinyl chloride resin industry or closely associated with it. We will continue to pursue the sale of this business and anticipate a favorable outcome to this endeavor,'' Schulze said in a recent news release.
Spell said Eagle is pursuing other avenues, but he declined to give details.
Condea Vista officials would not comment.