In a $205 million cash transaction, publicly held Quanex Corp. of Houston has acquired profile extruder Mikron Industries Inc. of Kent, Wash.
Mikron has grown from making screen splines, soft vinyl glazing materials and protective bumper strips into one of the leading U.S. extruders of vinyl and composite building products, with 2004 sales of $215 million.
Paul Warner, Mikron's president and chief executive officer, said that under a parent company like Quanex, Mikron will have deeper pockets that are necessary for investment in the composites side of its business.
``As your growth and capital needs become larger, it's a natural evolution,'' Warner said in a Dec. 10 telephone interview. ``There's a huge upside in the composites arena. It takes more and more investment. Vinyl's our core business, but we do see a big upside in composites.''
During the last few years, Mikron has invested in composites products, dedicating two facilities to that sector. The firm has extrusion facilities in Renton and Kent, Wash.; Richmond, Ky.; and Winnebago, Ill.
The deal, which Quanex financed by borrowing against a $310 million revolving credit facility, closed Dec. 9. Quanex is focused on engineered materials and components for vehicular and building products markets.
Officials said there will be no changes in Mikron's name, operating or management structure.
The deal was a 100 percent stock purchase from the Sandwith family, which pursued the acquisition to strengthen the firm's market position and assure the financial resources needed to continue the growth started in 1969 by Ron Sandwith, according to a news release issued by Mikron. Sandwith died in 2003.
``After careful consideration of all our options, we truly believe that the future growth of the company and the best opportunities for our people and customers are best served with this sale,'' Jeff Sandwith, former Mikron chairman, said in that release. ``Quanex management understands this business and industry better than anyone could've anticipated.''
Jeff Sandwith has concluded his role as chairman, but now will serve as a consultant.
``The addition of Mikron to our building products group is consistent with our strategy of growing our core engineered products business,'' Raymond Jean, Quanex chairman and CEO, said in a news release.
``The acquisition will allow us to further accelerate cross-selling opportunities that currently exist among our other vinyl and wood component businesses. Mikron represents our third acquisition in the fenestration market, and the growing scale of our building products businesses will allow us to invest in plant, equipment and development activities to further support our customers,'' Jean said.
Quanex officials, reached by telephone Dec. 10, said details have not been worked out on capital investments as management still is assessing the plants.
Quanex owns window company Amsco of Rice Lake, Wis., whose processes include roll forming, plastic extrusion, fabrication, assembly, and its own proprietary process that combines metal roll-forming and plastic extrusions into a single bonded process.
Quanex reported $563 million in sales for its building products division in 2003.