Royal Bank Equity Partners Ltd. plans to enter plastics processing by acquiring the plastics and coatings group of Noble International Ltd. of Bloomfield Hills, Mich. Royal Bank Equity agreed to buy a plant that injection molds automotive parts and a new painting facility in Stoney Creek, Ontario, and an interior-parts painting operation in Vassar, Mich. It agreed to pay as much as US$94 million for the acquisitions.
Toronto-based Royal Bank Equity is the merchant-banking arm of Royal Bank of Canada, Canada's largest bank. Philip Olsson, Royal Bank Equity managing director, said his firm has wanted to buy the Noble businesses for a long time because they are in growth markets and possess "outstanding management," which Royal Bank Equity will retain.
Robert Skandalaris, Noble chairman and chief executive officer, said Noble decided to concentrate on its metal fabricating and distribution business, which is concentrated in Michigan. The metals business has higher margins and is near Noble's head office, he said.
Royal Bank Equity agreed to pay between $89 million and $94 million, with $83.3 million of that in cash. The rest will be in a future cash payment and securities convertible into Noble common stock. The companies said the deal could be concluded the week of Jan. 10.
The sale will cut Noble's debt load and provide a significant gain to shareholders. Noble also announced in late December that it has retained J.P. Morgan Securities Inc. to help it examine other alternatives to boost shareholder value, including alliances, acquisitions, mergers and sales.
Tiercon Industries Inc. invested about C$25 million (US$17.3 million) in its new plastics painting plant, which opened last summer in Stoney Creek, about 60 miles southwest of Toronto. The facility and an injection molding plant next door provide parts to Tier 1 and 2 auto parts firms.
Olsson said his company's other investments include real estate, vinyl-coated textiles, die sets, airframe parts, newspapers and brick manufacturing in the United States.