The parent companies of Davis-Standard Corp. and Black Clawson Converting Machinery Co. are forming a joint venture that will combine two major North American players in the market for extrusion machinery.
``Joining forces will enable both companies to more efficiently allocate resources with regard to technology, delivery, commissioning, emergency service, customer support, research and development,'' Davis-Standard President Robert Ackley said in a March 31 news release.
The polymer machinery industry has not recovered from the worst cyclical downturn in recent history, said Robert Wood, chairman and chief executive officer for D-S owner Crompton Corp.
The deal has been rumored for weeks. Crompton has been looking for a buyer for D-S since July, when Wood told analysts that Davis-Standard did not fit in Crompton's long-term plans. Crompton, a publicly traded company based in Middlebury, is primarily a chemical company; its products include plastics additives.
``Given [plastics machinery] industry dynamics, we believe it is in the best interests of our shareholders for us to partner with a capable operator such as Black Clawson/Hamilton Robinson in order to leverage the benefits of industry consolidation,'' Wood said in the release.
Crompton will hold a 60 percent interest in the Davis-Standard LLC venture, said Crompton spokeswoman Debra Durbin. She said each partner will bring assets to the table and no cash will be exchanged.
Black Clawson is owned by private equity firm Hamilton Robinson LLC of Stamford, Conn. Crompton and Hamilton Robinson anticipate that the venture will be finalized within 30 days.
D-S' main assets are plants in Pawcatuck, Conn.; Somerville, N.J.; Elkrath, Germany; and West Midland, England. Black Clawson runs a plant in Fulton, N.Y. Ackley said that it is too early to know if the venture will consolidate any plants.
``After closing we will review everything,'' Ackley said by telephone.
D-S of Middlebury, Conn., had sales of about $180 million last year. It employs about 660, most of whom will become employees of the Davis-Standard LLC venture, which will be based in Pawcatuck.
The Somerville plant makes equipment for blown film, extrusion coating, cast film and blow molding. Pawcatuck focuses on other extrusion related machinery such as screws, sheet, pipe, profile, small systems, wire and cable, and reclaim. The Elkrath facility is D-S' main operation for Europe, handling some production and all European sales.
Black Clawson's headquarters plant in Fulton. makes flexible web converting and plastics processing equipment for extrusion coating, laminating, cast film, winding, pelletizing and related processes. Its sales last year were about $40 million. It employs about 150.
``Our objective for the new company is to focus on increasing customer value through improved product technology, global reach and enhanced local service and support,'' Black Clawson President Mark Panozzo said in the news release.
Panozzo and Ackley said they could not speculate about their potential roles in the new venture.
D-S saw its operating profit drop 35 percent last year to $3.4 million even though sales grew 8.1 percent. Its parent, Crompton, lost $34.6 million on sales of $2.5 billion.
Crompton boosted its chemicals business recently by agreeing to buy Great Lakes Chemical Corp.