In a $33 million cash deal, Houston-based Westlake Chemical Corp. has acquired PVC and ABS pipe extruder Bristolpipe Corp. of Elkhart, Ind.
The July 1 transaction will close at month's end, equipping Westlake with three pipe extrusion facilities, in Bristol, Ind.; Greensboro, Ga.; and Leola, Pa.
Westlake subsidiary North American Pipe Corp. operates PVC pipe extrusion sites in Springfield, Ky.; Litchfield, Ill.; Booneville, Miss.; Wichita Falls, Texas; and Van Buren, Ark.
Bristolpipe, owned by Heywood Williams plc of Huddersfield, England, also makes chlorinated PVC pipe. In ABS, PVC and CPVC, it makes pipe in diameters ranging from one-half inch to 21 inches for several end markets including residential drain, waste and vent; hot and cold water distribution; storm and sanitary sewer; communications conduit; manufactured housing; and agricultural applications. North American end markets include plumbing, municipal water and sewer and irrigation.
``The timing on it was perfect,'' Bristolpipe President Michael Powell said in a July 1 telephone interview.
``Strategically, it didn't fit with what Heywood Williams wanted to do. It was something that Westlake had been looking to do for some time. For Heywood Williams, the opportunity was too good to pass up. It's certainly going to strengthen Bristolpipe going forward.''
That strength comes in Westlake's position as a vertically integrated, international manufacturer and supplier of PVC resin, a favored status in the roller-coaster world of PVC pipe production, where selling prices ride the wave of resin price fluctuations.
Industry officials predict consolidation will continue, largely based on similar consolidation among resin manufacturers. PW Eagle Inc. of Eugene, Ore., nabbed the U.S.-based PVC pipe business of Uponor Oyj of Vantaa, Finland, in early 2003.
``There are too many small, single-plant facilities sitting around,'' one source said of the state of the pipe market in 2004.
According to Heywood Williams, Bristolpipe operates in a highly cyclical and commoditized market, competing with a number of larger, vertically integrated operators. Because of that, Bristolpipe's earnings profile exhibits a significant degree of volatility from year to year, officials said in a press release. Heywood Williams announced operational changes late last year, with measures designed to make the company profitable during 2004. At the time, officials said U.S. operations would barely be touched by the changes.
``The disposal of Bristolpipe strengthens our balance sheet and enhances our ability to build and develop our continuing operations,'' said Robert Barr, chief executive officer of Heywood Williams, in a July 1 press release.
Westlake officials would not elaborate on the company's plans for its North American PVC pipe business. Earlier this year, it did sell its polyethylene pipe production equipment to Independent Pipe Products Inc. of Dallas.
Bristolpipe had 2003 sales of $114 million, with 200 employees. North American Pipe Corp. employs 720 and had estimated 2003 sales of $345 million in pipe, profile and tubing.