Home Products International Inc.'s chief executive officer is taking the company private.
Jim Tennant, also chairman of the Chicago-based housewares major, had proposed a per-share price of $1.50 in February, which values the portion of the company he does not already own at $11 million. According to a June 2 news release, HPI now has entered into a definitive agreement with a company formed by Tennant to buy the injection molder.
``I think the reason for my desire to buy the company is because after 10 years of working there, I know the company better than anybody,'' Tennant said in a June 3 telephone interview. He has been chairman and CEO since 1994, and he has served as a director since 1992.
Tennant said the firm will be better able to compete as a privately held entity.
``Very small public companies, really, we get no attention,'' he said. ``But there are an awful lot of costs, an awful lot of distractions [in being publicly held]. If we took the cost and distraction, and focused it on being better and more effective for the company, at least you're getting a payoff on your level of costs and level of distraction.''
HPI struggled through 2003, battling rising resin costs, overseas competition and big-box stores reluctant to accept price increases. Kmart Corp., Wal Mart Stores Inc., and Target Corp. accounted for 73 percent of HPI's sales for 2003. Kmart is its largest customer, and that chain announced the closure of 326 stores in 2003. To cut costs during 2003, HPI closed an injection molding facility in Eagan, Minn. That site was HPI's most expensive to operate, according to the company.
Tennant said HPI's remaining production facilities now are stable. It operates four injection molding facilities, one each in Chicago; El Paso, Texas; Thomasville, Ga.; and Louisiana, Mo.
During 2003, HPI recorded a loss of $11.3 million before taxes on sales of $233 million; that compares with a profit of $14.3 million on sales of $249 million in 2002.
HPM officials expect to wrap up the deal in 90 days.
After Tennant proposed the $1.50-per-share deal in February, the company's board of directors formed a special committee of independent directors to handle negotiations. According to a June 2 filing with the Securities and Exchange Commission, that committee determined unanimously that the terms and conditions of the merger are fair.
Tennant had owned 467,628 shares; JP Morgan Chase & Co. is the largest shareholder, with nearly 1.3 million shares. HPI's headquarters will remain in Chicago.