The big industry news on Tuesday was definitely the announcement that North American super-group Quanex, who also owns spacer bar manufacturer Edgetech, had bought Flamstead Holdings Ltd, which owns HL Plastics who created the Liniar brand, Wegoma Machinery Sales and Vintage Windows. It was a hefty deal, in more than one sense. This post is my outsider’s take of the announcement.
Big cash, big group
The reported sums involved with this acquisition are up there with some of the biggest in recent years. Once source was quoting a figures of $145m in cash. If true then this is an indication as to how much the Americans value the group of companies. And not many would disagree with them. The launch of the Liniar brand from HL Plastics has been particularly successful.
The group now now come under the guidance of Quanex in North America. Not that I think this should be of much concern. They own Edgetech and they seem to be doing a pretty good job there. I am also told that Quanex plan to leave the businesses themselves as they are, with all levels of staff to remain in place. Of course that is the big worry when one company takes over another, will there be job losses or any changes. I am told that’s not going to happen, which is good to hear.
Hat trick of US acquisitions
This latest acquisition completes a hat trick of purchases from American companies recently. Not too long ago American door giants bought Door-Stop International for an undisclosed sum. At the beginning of May Masco announced it was to buy timber alternative pioneers Evolution, again for an undisclosed sum. And now the Quanex acquisition of Flamstead brings it to three. This time we know the figures involved.
So it does beg a question; why all the interest from across the pond? What is it the Americans see in our companies that make them want to spend their money over here? One of my guesses would be products.
Take a look at the companies who have been bought by the companies buying them. A composite door company, a timber alternative company and Flamstead who have a sysco, a fabricator and a machinery company. All product groups that are doing well in the UK right now. My guess is that these are products the buyers didn’t currently have in their portfolios, so wanted a piece of the action and profit over here. And, perhaps they have a longer term plan to introduce those types of products in the US at some point.
Another way of looking at this is from the perspective of the two different countries and their respective markets. In the UK, PVCu still very much sits at the top of the pile in the residential market and has done for decades. In the US though, PVCu – or vinyl as they call it, doesn’t have anywhere near the dominance as it does here. Timber and aluminium still play a big part over there. But that pattern is changing. There may be a thought over there that if they are to make the most of a possible vinyl boom, why not lean on some companies who have the experience and knowledge to help them? Seems logical to me.
Going forward, we can expect to see growth at HL Plastics accelerated as big bucks from American can now supercharge the business in all aspects.
To get daily updates from DGB sent to your inbox, enter your email address in the space below to subscribe: