Metal bumper specialist Flex-N-Gate Corp. is moving ahead with plans to buy Canada's Ventra Group Inc., with the support of Ventra's leaders.
Urbana, Ill.-based Flex-N-Gate announced July 24 it has reached an agreement to buy Ventra, purchasing all of the Oakville, Ontario, company's stock for C$1.65 (US$1.07) per share through its Canadian subsidiary, 3051932 Nova Scotia Co., now called VTA Acquisition.
Ventra's board of directors already has backed Flex-N-Gate's proposal, while founder Kenneth Nichols has committed to tender his 8.2 percent interest in the exterior specialist to support the purchase, worth a total of C$63 million (US$41 million).
The acquisition dramatically will increase Flex-N-Gate's use of plastic. The privately held company launched its first plastics operation last year with injection molding of bumper fascias in Tillsonburg, Ontario. Ventra, meanwhile, posted more than US$177 million in injection molding sales last year, accounting for nearly a third of its overall sales.
``We're bringing a lot of plastics into the company, and Ventra also can help us with vertical integration,'' said Flex-N-Gate Vice President Kevin Hamilton. ``Ventra is a well-respected company. It complements what we have.''
Shareholders still must buy into the deal, but things look good with the backing of Ventra's executives, he said.
Flex-N-Gate opened in 1956 and launched its first direct sales to automakers in 1969 with production of a bumper for Jeep. Shahid R. Khan bought the company in 1980.
The business has about 3,500 employees and production facilities in Illinois, Indiana and Michigan; as well as in Tillsonburg and Tecumseh, Ontario; and San Jose Iturbide, Mexico.
Flex-N-Gate does not release sales data and rarely comments on its activities. But Hamilton noted that company leaders want to assure Ventra employees and customers that Flex-N-Gate has no plans to sell off Ventra's assets but instead will use them for further growth.
It plans to extend production and sales by marrying its metal components with Ventra's capabilities, which include bumpers and other painted exterior plastic parts, he said.
Khan has taken some good steps to create a strong supplier base within Flex-N-Gate, said David Eberly, managing director of GMA Capital LLC of Farmington Hills, Mich., an automotive-focused, mergers-and-acquisitions firm.
Ventra will give Khan's operations the capability of matching a finished exterior panel with structural steel, he said. Despite some financial problems, Ventra is a respected producer within the industry.
``[Flex-N-Gate] is extraordinarily well-positioned with this acquisition,'' Eberly said.
Ventra put itself on the market earlier this year, after finishing its 2000 fiscal year with a loss of C$68 million (US$43.2 million) on sales of C$860.7 million (US$547.5 million).
Flex-N-Gate was an early suitor. It already had a long-term business relationship with Ventra, producing metal systems for bumpers that used the Canadian company's plastic fascia systems.
Even prior to the purchase announcement, the company was Ventra's biggest shareholder, holding about 18.2 percent of the total stock.
Ventra's stock sold for as little as C$0.25 (US$0.16) late last year, but improved to more than C$1 (US$0.65) since the board put it up for sale. Flex-N-Gate's bid represents a 30 percent premium over the closing price on July 23.
