Associated Materials Inc. is acquiring Cleveland-based Gentek Building Products Inc. in a $118 million cash deal.
Officials expect the deal, which they plan to finance with bank debt, to close by the end of the month.
The transaction gives the Cuyahoga Falls, Ohio-based parent company of Alside Inc. a foothold in Canada with one vinyl extrusion site and 20 distribution centers. Similarly, it amplifies its U.S. presence with 13 distribution centers in the mid-Atlantic region. Alside currently operates more than 90 of its own supply centers throughout the United States. The deal also gives Alside an increased presence in independent distribution, officials said.
In Associated Materials' second-quarter conference call Aug. 1, officials said they intend to keep all 124 supply centers operating.
``We believe company-owned distribution provides AMI with a key competitive advantage,'' Mike Caporale, Alside's chief executive officer, told analysts. ``We strongly believe in the brand equity of the Revere and Gentek names. We will maintain distinct separation of brands by continuing to offer differentiated products, sales and marketing support.''
Gentek has one vinyl extrusion facility in Burlington, Ontario. Alside currently operates vinyl extrusion sites in West Salem, Ohio; Ennis, Texas; and Freeport, Texas. Moreover, officials emphasized Gentek's metal manufacturing capabilities. The firm offers steel and aluminum products in addition to vinyl siding and accessories and vinyl windows.
``Their outstanding metal manufacturing capability will allow us to vertically integrate the metals products that are sold by our Alside supply centers,'' Caporale said in a news release.
Genstar Capital Corp., the Toronto private equity firm that owned Gentek, had been searching for a buyer for some time now. In early 2001, Pittsburgh-based Alcoa Home Exteriors Inc. signed a letter of intent to acquire Gentek, but Alcoa abandoned its attempt over unresolved liability issues associated with paint peeling from steel siding. Sale negotiations ceased in October 2001.
In the conference call, Caporale said AMI did quite a bit of analysis on the liability issue.
``We did receive a price concession for that issue,'' he said.
On Aug. 1, Associated Materials reported its second-quarter results, with sales of $180.4 million, a 9.4 percent increase over the same period in 2002, due to continued strong growth in vinyl windows. The firm had 2002 vinyl extrusion sales estimated at $256 million, with 20 extrusion lines.