Rubber roofing giant Firestone Building Products Co. has purchased the GenFlex Building Products unit of Omnova Solutions Inc., bolstering its growing thermoplastic roofing product line.
Firestone and Omnova reached the agreement Sept. 25 and closed the deal Sept. 27. The two companies had been negotiating since June.
Firestone, a subsidiary of BFS Diversified Products LLC, paid $29 million in cash for the unit, and Omnova retained $10.5 million in GenFlex accounts receivable, Fairlawn, Ohio-based Omnova said.
Indianapolis-based Firestone will receive all of Omnova's commercial roofing assets, including its thermoplastic roofing plant in Tuscumbia, Ala.; a product distribution center in Columbus, Ohio; and the GenFlex headquarters office in Maumee, Ohio.
GenFlex's current and future roofing warranty liabilities also are included in the sale, according to Omnova.
Gary Thompson, a 17-year Firestone veteran who will become GenFlex's general manager, said the transaction is beneficial for both companies.
``Omnova earns an adequate return on the investments they have made into this business,'' he said.
``Firestone will enjoy long-term benefits that will capitalize on our expanded economies of scale in manufacturing and shared services along with increasing sales and distribution channels for a wide variety of products and services.''
The GenFlex headquarters eventually will be relocated to Indianapolis in a separate office from Firestone's, Thompson said. The business, which employs about 100, will operate as an independent unit to be called GenFlex Roofing Systems.
A second roofing brand for Firestone
Firestone - which already has one thermoplastic olefin roofing site in Wellford, S.C., with three production lines - will offer a second brand of roofing products marketed under the GenFlex name, the company said.
Firestone also had manufactured ethylene propylene diene monomer roofing membranes for GenFlex in the past, and will continue to market them under the GenFlex brand, Thompson said.
The acquisition is a strong complement to Firestone's brand portfolio and is consistent with its plan to expand the markets and customers it serves, said Firestone President Mike Gorey, who also is chief executive officer of BFS Diversified Products.
Firestone also will take advantage of GenFlex's well-established network of local and national distributors, which will provide a foundation for growth in all areas of the country, according to Thompson.
``Firestone is committed to continued growth in the commercial and industrial markets,'' Thompson said.
``By adding GenFlex as a second brand, Firestone will be better prepared to address current customer needs as well as create the opportunity to enter into newly defined market segments,'' he said.
Omnova always is looking at ways to redeploy assets in a way to help it grow, a spokeswoman said, and the firm saw this as an opportunity to fund that growth in areas that have leading market positions.
The company has two larger business units, Performance Chemicals and Decorative Products, where Omnova will focus its resources, said Kevin McMullen, Omnova's chairman and CEO.
Omnova plans to use the proceeds from the sale to pay down debt and fund growth initiatives, he added.
In the 12-month period ended Aug. 31, the GenFlex unit posted sales and earnings before interest, taxes, depreciation and amortization of $114.4 million and $1.9 million, respectively. In fiscal 2005, the roofing segment had sales of $115.1 million, while the two other Omnova units posted total sales of $695 million, according to the company's annual report.
General Tire & Rubber Co. started the GenFlex roofing business in 1980.
The nontire segment of the company changed its name to GenCorp. in 1984, and in 1999 the firm spun off some of its business units into what is now Omnova Solutions.
GenFlex used to operate out of Omnova's Jeannette, Pa., site. But after the company started producing thermoplastic roofing membranes at the Alabama plant beginning in the spring of 2001, the Jeannette facility began manufacturing for the decorative products segment, the spokeswoman said.
The Alabama plant will be Firestone's 14th North American manufacturing facility. It already operates the Wellford factory, two EPDM roofing membrane sites, two asphalt-based plants and eight insulation production locations.
Firestone Building Products acquired the South Carolina site in 2002 and has expanded capacity there twice.