Moldflow Corp. announced Jan. 26 it has purchased American MSI Corp., a maker of hot-runner temperature controls based in Moorpark, Calif.
Wayland-based Moldflow said it will pay $7.3 million in cash and issue 349,288 shares of Moldflow's common stock in exchange for all of American MSI. Total value of the deal is expected to be about $12 million. Moldflow is traded on Nasdaq.
American MSI had 2003 sales of about $9 million. The company employs 42 people, most of them in Moorpark, Moldflow officials said. They said Moldflow does not plan any layoffs and will retain the Moorpark facility.
Moldflow also announced it will reorganize its operations into two business units. Tim Triplett, who was chairman and chief executive officer of American MSI, will become executive vice president and general manager of the Manufacturing Solutions unit. Moldflow has promoted Ken Welch from executive vice president for marketing and field sales to executive vice president and general manager of the Design Analysis Solutions unit.
In other management changes, Richard Underwood has resigned as Moldflow's executive vice president of sales and left the company. Peter Kennedy, Moldflow's vice president of technology development, has been named chief technology officer.
Founded in 1984, American MSI makes hot-runner controllers as its core business. The privately held company expanded into plantwide monitoring and networking systems in 2000.
Moldflow's original product is computer-aided-engineering software that simulates how a mold fills. In 1998, the company came out with MPX - Moldflow Plastics Xpert - that links that data to the injection molding machine's controller. Moldflow got into the plantwide monitoring business in 2001, when it purchased Branden Technologies Inc. of Wilsonville, Ore. A year ago, Moldflow bought a European supplier of production-monitoring systems, Controle Processus Industriels of Dampart, France.
American MSI's hot-runner controller business was the key to the deal, Welch said. ``The first line of optimization on these hot-runner systems is the hot-runner control,'' he said.
Welch said the American MSI plantwide monitoring technology is complementary to Moldflow's systems. In the future, he said, the products will come together into a single plantwide system.
Richard Eastman, an analyst who covers Moldflow for Robert W. Baird stock brokerage in Milwaukee, said the deal gives the company a more complete product offering. ``I think they're basically getting down, further and further, into the tool,'' he said.
Roland Thomas, Moldflow's president and chief executive officer, said the American MSI acquisition ``results in a larger Moldflow footprint on our customers' shop floor.''
``Hot-runner controls are the final control element in the production of a plastic part,'' Thomas told analysts during a conference call about Moldflow's second-quarter financial results.
American MSI has more than 3,000 customers and more than 8,000 installations, mainly in the United States. Moldflow - a larger company with sales spread across the United States, Europe and Asia - can help spread the hot-runner controllers around the world, Thomas said.
Moldflow reported sales of $20.1 million in the first half of fiscal 2004, which ended Dec. 27. That is a 17 percent increase over first-half sales of $17.2 million a year earlier. The company turned a $1 million profit in the first half, nearly five times as much as the $216,000 in the same period a year ago.
Thomas said small plastics molders are a growing part of Moldflow's business, as original equipment manufacturers and Tier 1 suppliers continue to push design work lower on the supply chain.
In response to an analyst's question, Thomas said interest is picking up in North America, but actual orders continue to lag. Thomas said he thinks U.S. business will improve in the next few months.