New Hope, Minn.-based LDI Composites Co. bought the GeoDeck composite decking, railing and roofing product line from Kadant Composites LLC for $11 million.
GeoDeck production will continue at the 130,000-square-foot manufacturing facility in Green Bay, Wis., where LDI Composites will set up its headquarters. The facility employs about 65 and operates nine extrusion lines.
Kadant Composites, a subsidiary of Action, Mass.-based paper company Kadant Inc., had revealed its intentions to sell its composite decking business in an October 2004 conference call. Almost exactly a year later, LDI and Kadant closed the sale Oct. 21.
Composite decking's market acceptance is growing at a vigorous pace. Its increasing popularity played a significant role in LDI's decision to buy GeoDeck, LDI spokesman Larry Brauch said.
``That's obviously a good portion of it,'' he said. ``It's a sector that is growing.''
LDI is an affiliate of Liberty Diversified Industries Inc., a private holding company near Minneapolis that also owns firms in packaging, materials-handling, office supplies and furniture industries.
Kadant spokeswoman Karen Kirkwood said that while Kadant officials recognized composite building products as a huge growth market, they simply did not fit in well with the rest of the company's operations.
``It's mostly because it wasn't in their core,'' Kirkwood said. ``They just weren't the right home for it. They needed to hand it off to someone in the industry.''
According to a Kadant news release, LDI will assume certain liabilities of the GeoDeck business, but Kadant will cover any warranty claims from products made prior to the sale. Kadant deposited $3.5 million into an escrow account to handle potential claims.
Kadant also reported a ``high level of warranty claims received in the third quarter,'' and with an additional pretax provision of about $4 million, bringing the third-quarter warranty reserve to $6 million.
Kadant officials said excessive oxidation in their composites prompted the claims.