Hoping to lose the financial burden of its subsidiary and refocus its niche in the automotive market, Williams Controls Inc. signed a binding agreement June 16 to sell its injection molding subsidiary, Premier Plastic Technologies Inc. to 3Dm International Inc.
Under the deal, which could be finalized in six to eight weeks, Madison Heights, Mich.-based 3Dm will buy $10 million of Premier's assets and assume liability for another $10 million. Williams also will receive a 6 percent stake in privately held 3Dm, said Thomas Itin, chairman and chief executive officer of Portland, Ore.-based Williams.
If 3Dm decides to form a new subsidiary out of Sterling Heights, Mich.-based Premier, which specializes in exterior automotive lighting, then Williams would have the option of buying 40 percent of the new entity. For now, 3Dm will own Premier, but the unit will maintain its corporate identity, said Mario Dinello, chief executive officer for 3Dm.
Premier "has one of the few plants in the country that is able to produce a very sophisticated type of lighting," Dinello said of 3Dm's interest in Premier. "Only four or five plants in the country have the capability."
Talks of the deal started earlier this year. The companies first inked a nonbinding letter of intent then, in May, Premier entered into an operating agreement with Rapid Product Tech nologies, a partially owned subsidiary of 3Dm. Rapid then assumed day-to-day operations of the company and appointed a new general manager. Since then, Premier recorded a 12 percent increase in sales and 20 percent reduction in costs.
Williams, which designs and manufactures sensors, controls and electronic pedal systems for the automotive industry, never had the same luck with the injection molder.
"We lost several million dollars over the years [on Premier], so it was a drain of energy, people, capital and earnings," Itin said.
To be successful with Premier, Williams would have needed a patentable product, considerable size to carry projects for long-term earning potential and some relationship with minority suppliers, Itin said.
"Those are important but we had no expertise or patents in injection molding equipment. By linking up with Rapid we do," Itin said, adding that Rapid, which has minority-owned status, also brought engineering and design capabilities to the table.
3Dm is working on several special technologies that it may use at Premier, including a blow molding technique that uses multiple resins.
3Dm's sales fall between $45 million and $50 million, Dinello said. Williams reported 1999 sales of $61.4 million, about $9.5 million of which the firm attributed to Premier.