CINCINNATI — Milacron Inc.'s top executive, Daniel J. Meyer, said this week that his company looked at buying the $1.2 billion Mannesmann Plastics Machinery AG — and even lined up financing — but Milacron backed away.
Instead, he said, Milacron leaders decided to stick with their strategy of offsetting the up-and-down nature of plastics equipment with so-called consumable industrial products, considered more steady because they must be replaced more frequently. Milacron announced it will buy two German makers of mold bases, EOC Normalien of Ludenscheid and Reform Flachstahl GmbH, based in Fulda. Milacron also is buying Progress Precision Inc., a Mississauga, Ontario, screw and barrel maker.
"MPM has some very good machinery businesses, but as we take a look at the size of those machinery businesses and what we're doing to balance our capital goods with our aftermarket, things like barrels and screws and the D-M-E mold-base-type businesses, we'd like to have more of a balance," Meyer told Plastics News before the company's April 24 annual shareholders meeting in Cincinnati.
The week before, he volunteered a similar statement during an April 20 conference call to financial analysts.
His comments marked the first confirmation that, at least for awhile, Milacron officials did toy with buying all of MPM — and becoming the world's undisputed big kahuna of plastics machinery.
Milacron is by far the largest U.S.-owned plastics machinery maker, with sales of $874 million in 2000.
But worldwide, Milacron is second behind MPM and its stable of machinery from Kraus-Maffei, Van Dorn Demag, Demag Ergotech, Netstal, Billion and Berstorff.
Last November, Siemens AG put MPM on the selling block. Siemens wants to sell all six companies to a single buyer. Published reports have estimated the asking price at $920 million and more than $1.5 billion.
Milacron's total corporate sales were $1.58 billion in 2000, generated from its two main units, Plastics Technologies and Metalworking Technologies. The metalworking side is focused heavily on consumable products such as grinding wheels and cutting fluid.
Meyer stressed that Milacron will not try to buy all of MPM. But he disputed comments by analysts, quoted in a Feb. 5 Plastics News story, who doubted the Cincinnati-based company's ability to gobble down a company as big as MPM. The analysts said Milacron is too small and has too much debt to swing such a deal.
Not true, Meyer said: "We had all that figured out. That doesn't mean we wouldn't rearrange some of the company we have right now. But we had no problem. We had the banks all willing, if we wanted to go into that."
In addition to the strategic reasons, Meyer suggested the price wasn't right.
"We were interested. And quite frankly, we put a different value on it than other people did," he said.
Some industry observers have speculated that Milacron might try to sell Metalworking Technologies to help finance an MPM deal. Meyer didn't get into specifics but said Milacron executives always are looking at potential deals, both on the buy and sell sides.
"Those types of things are constantly under review," he said before the shareholders meeting.
Meanwhile, because of MPM's huge size, most industry observers expect a large investment firm will end up buying the Munich, Germany-based firm. But that buyer might turn around and sell off individual MPM companies.
That would interest Milacron.
"Oh, we definitely would look at the parts," Meyer said.