Struggling building-products maker Royal Group Technologies Ltd. now is receiving interest from several other potential buyers after equity firm Cerberus Capital Management LP bid C$1.3 billion (US$1 billion), its offer hinged on a look into Royal's books.
New York-based Cerberus offered C$14 (US$11) per share, pending completion of due diligence. Royal announced the bid May 16.
Cerberus already has an agreement with Royal founder Vic De Zen and some other major shareholders, who own about 19.9 percent of Royal's outstanding shares.
Royal, based in Woodbridge, Ontario, said it is considering the offer. Other firms also have expressed interest, Royal said, but it declined to name the potential suitors.
A Cerberus spokeswoman declined comment.
Cerberus is named for the three-headed dog guarding the gates of hell in Greek mythology and is known for an investment strategy of keeping firms from flaming out, according to market data firm Hoover's Inc.
According to one industry source, Cerberus has a reputation as a very aggressive, precise firm with its own financing and equity arms. It likes to acquire struggling firms at a good value, and either resuscitate or sell.
Cerberus has been active in acquiring plastics-related firms. Last year, it acquired auto parts maker Peguform GmbH of Botzingen, Germany, which was operating under Chapter 11 bankruptcy protection. Cerberus in 2002 purchased fuel system supplier Pilot Industries Inc. out of Chapter 11, buying it for $41.5 million and selling it for $85.4 million less than a year later.
This is not the first time Royal has been shopped. Officials explored a possible sale in 2003, but the four-month process resulted in no formal offer.
Meantime, Royal Group also named a new president and chief executive officer.
On May 13 - prior to the announcement of the Cerberus bid - Royal announced that Lawrence Blanford would assume the top executive position on May 30. Blanford had been president of Philips Consumer Electronics North America. He also has served as president of Maytag Appliances and Maytag International; and vice president of marketing and national account sales for the building insulation division of Johns Manville.
Royal Group also announced its first-quarter results on May 13. The firm reported a loss of C$11.4 million (US$9.4 million) compared to a profit of C$9.4 million (US$7.2 million) for the same period in 2004.
The company blamed a 7 percent sales decline in its custom profiles division on bad weather and a strengthening Canadian dollar.
``First-quarter financial results reflect the harsh reality of tougher business economics within our markets, including higher raw material costs, increased competition in certain markets, and an unfavorable swing in currency exchange rates,'' said Jim Sardo, Royal's interim president and chief executive officer, in a news release.