In a 786 million ($1.14 billion) cash deal, Brussels, Belgium-based Etex Group SA is acquiring Glynwed International plc's pipe systems business.
The deal is to close in March and includes the former Ipex Inc. operations, Canada's largest pipe extrusion company.
Pending acceptance by shareholders and antitrust approval, the deal would make privately held Etex the world's largest manufacturer of plastic pipe and fitting products, said Paul Van Der Straten, Etex's director of marketing and communications.
As part of the deal, the Glynwed name will remain on the pipe systems business, said Tony Wilson, who will transfer with Glynwed Pipe Systems as chief executive officer. The remaining Glynwed businesses, comprising consumer and food-service products operations, will be renamed Aga Foodservice Group plc.
Birmingham, England-based Glynwed's pipe systems division generated 1999 sales of 607.3 million ($982 million). Last November, Glynwed prepared for the sale by splitting the company into two separate businesses.
"We've flagged this consolidation for some time," Wilson said. "In exactly two months, we've followed through on what we said."
Beyond broadening Etex's geographic range, the acquisition also gives Etex a wider product mix, Wilson said. Glynwed Pipe Systems' strength in high-pressure systems includes the water, gas and industrial sectors, which will complement Etex's irrigation products.
Glynwed built a strong position in plastics during the past few years, said Wilson, including its $350 million acquisition of Ipex Inc. in 1999.
That acquisition improved Glynwed's North American foothold, which included pipe supplier Enfield Industrial Corp. in Lake Bluff, Ill., and Industrial Plastics Technology Inc., a Columbia, Md.-based industrial pipe and fittings distributor.
In 1998, Glynwed purchased Friatec AG, a pump, valve and pipe maker in Frankfurt, Germany.
Meanwhile, Etex had acquired Marley plc of Sevenoaks, England, in 1998. Marley's operations include plastic pipe, fittings and hosing, decorative moldings and window profiles. In total, Etex has units in 36 countries on five continents.
Asked if Etex will seek further acquisitions, Van Der Straten said: "For the time being, surely not. Let's digest this first."
Plastic pipe and fittings currently make up 30 percent of Etex's sales, he said. With Glynwed, it would climb to 50 percent.
Etex said it had 1999 sales of 2.7 million euros ($2.88 million). With the acquisition, the company expects total group sales of 4 billion euros ($3.76 billion).