Saurer AG, the Swiss parent of Xaloy Inc., announced Dec. 1 that it has sold Xaloy's European screw and barrel operations to Brescia, Italy-based O.M.G. SpA.
The move comes 31/2 months after Xaloy bought New Castle Industries Inc. to create the world's largest screw and barrel maker. Xaloy officials said the Saurer sale covers only the European plants - the deal does not include Xaloy's barrel, screw, chill roll and other operations in North America and Asia. Publicly traded Saurer called the sale in Europe ``the first step'' in its previously announced decision to divest its Surface Technology division. Saurer plans to focus on its main businesses in textile machinery and automotive transmissions.
The Xaloy/New Castle U.S. operations still are for sale. ``I expect to announce an ownership change for Xaloy within a few months,'' Walter Cox, Xaloy's chief executive officer, said in a news release.
When Xaloy bought New Castle Industries, it created a 700-employee screw and barrel giant with combined sales of $80 million, including the European operations.
With the sale to O.M.G., that giant just got smaller by about one-fourth. O.M.G. picks up two Xaloy factories - a screw plant in Brno, Czech Republic, and a factory in Olten, Switzerland, that makes bimetallic barrels. Xaloy's European operations employ 183 and generate sales of 30 million Swiss francs ($23 million), according to Zurich, Switzerland-based Saurer.
Last year, Xaloy closed a third European facility, an assembly plant in Remscheid, Germany, said a company spokesman.
Terms of the deal were not released. O.M.G. will operate the group under the name of Bernex Bimetall.
Cox said Xaloy's purchase of New Castle, and the sale in Europe, reflect the need for screw and barrel business consolidation, which ``has significantly contracted since its peak in 2000.''
``Xaloy realized in 2002 that this was a long-term contraction and that industry consolidation would be necessary to restore significant profitability to our industry,'' Cox said.
Pulaski, Va.-based Xaloy remains the market leader in the Americas and the Asia-Pacific region, Cox said. Europe remains a regional, slow-growth market, he said.
``Many possible consolidation scenarios were explored for Europe and this solution best met the needs of our customers and employees there,'' he said.