A major new player has emerged to lead the world's PVC building profiles sector with Deceuninck NV's agreed purchase of Thyssen Polymer GmbH from German industrial group ThyssenKrupp AG.
While the deal combines two European companies, it has major ramifications in North America. Thyssen owns Oakland, N.J.-based Vinyl Building Products Inc., which runs 30 extrusion lines at plants in Oakland and Little Rock, Ark., turning out its Vinyline brand of window and door profiles. Deceuninck already runs the U.S. facilities of Dayton Technologies LLC in Monroe, Ohio, and Acro Extrusion Corp. of Wilmington, Del.
The acquisition of Thyssen Polymer - which currently places fifth among the world's profile makers, with an extrusion capacity of 189 million pounds - propels third-ranked Deceuninck of Hooglede, Belgium, to the top slot, ahead of German rivals HT Troplast and Veka AG.
``Thyssen Polymer's range of door and window profiles and its geographical markets are complementary to those of Deceuninck,'' said Clement De Meersman, Deceuninck managing director. The companies also share similar business philosophy, including an emphasis on extrusion technology and the use of self-manufactured tools, he said.
According to one published report, Deceuninck is paying $119 million for the business, including assuming about $75 million in debt.
When the takeover is complete in June, the enlarged Belgian group will have production units in Belgium, Britain, France, Germany, Poland, Turkey and the United States. It will have capacity to process up to 430 million pounds of material per year. Its current annual capacity stands at 275 million pounds, according to Deceuninck.
Thyssen Polymer is part of the ThyssenKrupp Technologies division of the Dusseldorf, Germany-based parent company. Other divisions manufacture metal automotive components and offer industrial services.
ThyssenKrupp, formed in 1999 as a result of the merger of the two German industrial conglomerates, decided to sell its only plastics extrusion business as part of a reorganization plan following the merger, ThyssenKrupp said.
``As part of its active portfolio management strategy, ThyssenKrupp Technologies has now found the best owner for the Thyssen Polymer business unit. ... The company is a leading manufacturer of plastic profile systems for windows, doors, conservatories and facades. These are activities which are not earmarked for expansion in [ThyssenKrupp],'' the firm said in a news release.
The deal will add new capabilities to Deceuninck's armory including Thyssen's conservatory business and injection molding capacity at the firm's European plant in Bogen, Germany. Also, it will double the number of Deceuninck's production facilities in North America.
Deceuninck will benefit with a boost from Thyssen's sales, particularly in central and Eastern Europe. Thyssen Polymer, with a 900-strong work force, recorded 2002 sales of nearly 186 million euros ($199 million), while Deceuninck, which employs 1,776, reported sales last year of more than 362 million euros ($387 million).
Together, the profile manufacturers won the greatest share of their total sales, 26.2 percent, in the United States last year, accounting for more than 143 million euros ($153 million). Southern European markets accounted for nearly 19 percent, with central and Eastern Europe representing more than 16 percent, according to a presentation given in Brussels, Belgium, by Deceuninck.
The Belgian group sees significant synergies emerging from the merger, including optimization and integration of compounding, extrusion, lamination and injection molding processes, as well as shared overhead.
Still, De Meersman said the Thyssen operations are a good fit for Deceuninck with little duplication, and the Belgian company has no immediate plan to reduce the work force at plants it is acquiring.
``The advantage of Thyssen for us is it is a simple-structured company. Other companies in the sector have a significant number of plants in different countries, as does Deceuninck. Thyssen has one plant in Europe and two in the United States.
``For us, the highest priority is not to look for job cuts. We have no plans in the short term for job cuts,'' he said in a telephone interview.
To illustrate the easy fit, De Meersman pointed to the natural geographical spread of his firm's existing plants and the Thyssen newcomers in the United States. One of Deceuninck's U.S. facilities, Acro Extrusion, is a small plant handling short-run profile production. Apart from that, the enlarged group will have three large, well-equipped production facilities spread across the United States, De Meersman said.
He added that the Thyssen plants are modern, efficient operations and do not require any major new capital investments.
At Bogen, Thyssen Polymer operates 48 extrusion lines with annual capacity of 143 million pounds as well as 14 injection presses and six foiling lines. The plant also has compounding capacity of 203 million pounds and a toolmaking operation.
The company has a sales and warehouse subsidiary in Wroclaw, Poland, with a 16-member work force and annual sales of more than 20 million euros ($21 million).
Thyssen's U.S. operations, with total annual sales of nearly 53 million euros ($56 million), have extrusion capacity of 46 million pounds, two foiling lines, compounding capacity of 70 million pounds and a toolmaking facility.
The acquisition is in line with the strategy set out by Deceuninck in 1999, when it announced it planned to achieve 500 million euros ($535 million) in sales by 2004. Its objectives included becoming one of the world's top three producers and achieving a 10 percent market share in certain areas.