Channell Commercial Corp., a rotational molder of telecommunications equipment, has acquired 75 percent of Bushman Tanks of Dalby, Australia.
Bushman is Australia's largest maker of rotomolded water storage tanks. The company had unaudited sales of US$28.7 million for the fiscal year that ended June 30.
``The market opportunity in Australia for polyethylene water tanks is very attractive,'' said William H. Channell Jr., president and chief executive officer of Channell, which is based in Temecula, Calif. ``Growth rates have been estimated to be in the double-digits for each of the last five years while new government regulations are expected to increase demand in urban markets significantly going forward.''
These regulations require new buildings constructed in certain areas to install water tanks to store the valuable resource. Bushman estimates that these mandates could raise the yearly amount of tanks sold from 40,000-44,000 to 80,000.
Bushman Tanks provides quite a departure from Channell's other products, which include various types of copper and fiber optic connectors and thermoplastic and metal enclosures for electronic components. Channell said the acquisition is an attempt to diversify the company.
``While there are signs that the global telecommunications market is turning around, we can't wait idly by for that to happen,'' he said. In a Aug. 3 conference call with financial analysts, Channell said the pick of Bushman was no fluke: ``After much research and development, we found the telecommunications market would not turn around quick enough,'' he said. ``Water retention, managing water is a unique industry that we want to be a part of.''
Channell bought a majority stake in Bushman for $16.1 million; ANZ Private Equity bought the remaining 25 percent for $2.6 million. Channell had total sales of $84.8 million for 2003; $21 million of which was rotomolding sales according to Plastics News estimates. Channell is ranked 22nd among North American rotomolders by Plastics News.
Channell employs approximately 110 and currently has four rotomolding machines at its plant in Temecula. The company is publicly traded on the Nasdaq stock exchange.