Ply Gem Industries Inc. plans to continue to expand its profile extrusion business for siding, windows and fencing in 2004 - but now the growth will be under new ownership.
A New York private equity firm has acquired Ply Gem in a $570 million deal scheduled to close in 2004's first quarter.
Caxton-Iseman Capital Inc. announced Dec. 22 that it signed a definitive agreement to acquire the vinyl building products segment of Nortek Inc. Providence, R.I.-based Nortek in October had announced its intent to sell the business. Ply Gem units include well-known extrusion firms Kroy Building Products Inc., an extruder of fence, deck and railing profiles based in York, Neb.; and Variform Inc., of Kearney, Mo., whose specialty is vinyl siding.
``When we were with Nortek, we had an excellent financial partner,'' said Lee Meyer, Ply Gem's president and chief executive officer, in a Dec. 22 telephone interview. ``With Caxton-Iseman, we're going to have another excellent financial partner. We're excited about the deal.''
Ply Gem operates vinyl and composite extrusion sites in York; Kearney; Fairbluff, N.C.; Martinsburg, W.Va.; and Jasper, Tenn. Meyer said the next 18 months will mean installation of more extruders and a focus on de-bottlenecking projects.
``We're going to continue to put resources into siding, windows and fence to support growth opportunities,'' said Meyer, who was appointed president and CEO of Ply Gem in 2002 after serving as president of Variform. ``We continually upgrade our facilities and do de-bottlenecking.''
For Nortek, the divestiture is consistent with its focus since it was taken over in 2002 by management members and private equity firm Kelso & Co. L.P., based in New York. Nortek acquired Ply Gem in 1997 and continued adding to its vinyl building products offering, capping it off with the acquisition of Kroy in 1999. Ply Gem owns CWD Windows and Doors, a fabricator based in Calgary, Alberta; Great Lakes Windows Inc., a fabricator based near Toledo, Ohio; and Thermal-Gard Inc., a vinyl-clad aluminum window firm, based in Punxsutawney, Pa.
``The net proceeds will enable Nortek to reduce outstanding indebtedness and position Nortek to continue the profitable growth of its market-leading businesses,'' Richard Bready, Nortek's chairman and chief executive officer, said in a news release.
Management at Ply Gem will stay intact in the deal, officials said. Members of the senior management team will collectively own more than 15 percent of the common stock of Ply Gem once the transaction is complete. Frederick Iseman, managing partner of Caxton-Iseman, will become Ply-Gem's chairman.
The polymer-related building materials sector has been a hot-bed of buyout activity over the past 18 months. Private investment firm Graham Partners Inc., based in Philadelphia, has made two acquisitions this year. In March it acquired specialty millwork maker HB&G Building Products Inc., based in Troy, Ala. In April, it acquired Nailite International Inc., a Miami-based injection molder of siding panels.
In 2002, private equity firm Harvest Partners Inc. bought Associated Materials Inc., the parent of window and siding firm Alside Inc. in Cuyahoga Falls, Ohio. That transaction was valued at $436 million.
``Ply Gem represents to us an extremely attractive investment opportunity in an industry sector with significant growth potential,'' Robert Ferris, a managing director with Caxton-Iseman, said in a news release. ``With Ply Gem's solid foundation, we will be able to pursue an aggressive strategic growth plan and broaden and enhance the company's product portfolio.''
Ply Gem had 2002 sales of $509 million with 2,600 employees. In Plastics News' 2003 ranking of Pipe, Profile and Tubing extruders, Variform reported $287 million in extrusion sales with 1100 employees and 45 extrusion lines, including data for Kroy.