Nortek Inc. may sell its window, door and siding segment, the company announced Oct. 9.
The unit includes well-known vinyl siding extruders Variform Inc. in Kearney, Mo., and Napco Inc. in Valencia, Pa., as well as Kroy Building Products Inc., a maker of fence, deck and railing profiles in York, Neb.
Providence, R.I.-based Nortek is exploring options for the segment, which comes as no surprise to polymer players serving the building products industry.
Private equity firm Kelso & Co. LP of New York and members of Nortek's management purchased Nortek earlier this year. Nortek previously was a publicly traded company.
Nortek said Oct. 9 it has hired UBS Securities LLC and Daroth Capital Advisors LLC to assist in the process.
The building and construction market has been solid in an uncertain economic climate, buoyed by strong housing starts and favorable remodeling activity.
The segment has been a hotbed of buyout activity since 2002. In a $436 million deal that year, private equity firm Harvest Partners Inc. nabbed Associated Materials Inc., the parent of window and siding firm Alside Inc. in Cuyahoga Falls, Ohio.
Graham Partners Inc., a private investment firm in Philadelphia, has made two acquisitions this year in polymer-related building products. In March, it nabbed HB&G Building Products Inc., a maker of specialty millwork based in Troy, Ala. In April, it bought Nailite International Inc., an injection molder of siding panels based in Miami.
Private equity firms in general increase the value of such firms just to sell them, said Steven Bernard, director of mergers and acquisitions market analysis with Robert W. Baird & Co. Inc. of Milwaukee.
``In this day and age, everybody's under pressure,'' Bernard said in an Oct. 10 telephone interview. ``Right now, divestitures are a very active part of the marketplace.''
A lot of firms are getting rid of businesses that are not great fits, streamlining businesses and operations so that they are better positioned with better balance sheets and more profitable for the economic upturn, he said.
``Businesses that are in good areas and have good growth prospects tend to get higher valuation multiples,'' he said. And, manufacturers in general will see this as a good opportunity to reduce debt.
After Kelso made its bid for Nortek in 2002, several sources in the building products industry predicted that Kelso would sell off parts of the business.
Several sources have speculated that any of Nortek's vinyl siding businesses might go to players in the siding industry that do not currently have polymer-related products. In the mature vinyl siding market, it does not quite make sense for industry players to absorb additional business.
