Glynwed International plc has leapt into North American plastic pipe making in a big way with its £224 million (US$350 million) purchase of Ipex Inc., Canada's top pipe extruder.
The deal reinforces Birmingham, England-based Glynwed's position as the world's leading manufacturer of plastic pipes and fittings, and gives it a firm foothold in the North American market.
Key attractions of Ipex are its strong market position, its ``niche products and high profit margins,'' its complementary range of products, its geographical spread and its technological know-how, according to a Glynwed news release. One of its key products is large-bore pipe in diameters as large as 48 inches.
``The North American market for plastic pipe systems is growing rapidly, as modern plastic systems replace more traditional materials, and Ipex is playing a leading part in this development,'' said Tony Wilson, Glynwed chief executive officer.
Glynwed agreed to pay Ipex's two shareholders, Montreal steel-wire rod and fasteners group Ivaco Inc. and Scepter Holdings Inc. of Toronto, £192 million (US$300 million) in cash and £32 million (US$50 million) in securities that can be exchanged for Glynwed shares.
In 1998, Ipex earned C$62.1 million (US$41.9 million on sales of C$400.5 million (US$270 million), according to Glynwed.
Don Mills, Ontario-based Ipex generated about a third of those sales from the United States. Its U.S. exports are growing, particularly from its new, large-bore pipe products, according to Glynwed.
Ipex, which employs 1,500, runs 14 principal manufacturing sites making PVC, ABS and polyethylene pipe and fittings and other extruded products. It also has 13 distribution centers in Canada.
Main plants are in Toronto, Mississauga and London, Ontario; St. Jacques, St. Laurent and St. Eustache, Quebec; Saint John, New Brunswick; Weyburn, Saskatchewan; Edmonton, Alberta; and Langley, British Columbia.
Last year, 60 percent of Ipex's sales were in plastic pipe, with the balance from fitting and other auxiliary products, according to Glynwed.
Glynwed said it will retain Thomas Torokvei, Ipex's current chairman and chief executive officer, and his management team.
Glynwed already has a small slice of the North American market, and the firm now expects to acquire more firms to beef up its regional presence. Glynwed owns Enfield Industrial Corp. in Lake Bluff, Ill., which supplies PE, PP and ABS pipe systems, and in 1997 it bought industrial pipe and fittings distributor Industrial Plastics Technology Inc. of Columbia, Md.
Late last year, Glynwed purchased pump, valve and pipe maker Friatec AG of Frankfurt, Germany, for US$298 million. Glynwed acquired several other pipe and fittings firms in 1998, including Akatherm KMF BV of Panningen, the Netherlands, for US$10 million, and Straub Kupplungen AG of Wangs, Switzerland, for US$32 million.
After the Friatec purchase, Glynwed said it would continue to seek other acquisitions, particularly in North America. Its latest move is in line with the firm's restructuring to de-emphasize metal processing and invest in pipe systems and cooking appliances.
Glynwed sold its metals processing businesses for £166 million (US$261 million) in March. Today, with Ipex on board, its pipe systems division accounts for more than 80 percent of total corporate sales.
Ivaco announced May 27 that it was negotiating with a small number of prospective buyers for Ipex. A year ago, Ivaco and Scepter had planned an initial public offering of Ipex stock on Canada's stock exchanges, but the firms dropped that plan in August, blaming weak stock markets.