Quanex, Edgetech Execs Optimistic Following
January 31, 2011
Quanex Building Products Corp. today announced it has signed a definitive agreement with Lauren International to acquire Edgetech I.G. Inc. for $107 million in an all cash transaction, and executives at both companies say they're optimistic about what this merger of technology and expertise will mean for the industry.
Edgetech president Mike Hovan told USGNN.com this afternoon that Edgetech parent company Lauren International has been looking for a buyer for the company that would better be able to allow the warm-edge spacer manufacturer to grow. "Lauren International came to the realization that a parent with a little bit more capability would be in a better position to allow Edgetech to continue to grow to the extent that we believe it can. It wasn't an active strategy, it's just been something that's been in the backs of the minds of different people in Lauren International," he said. "The opportunity arose, we started talking and we are where we're at today."
|Edgetech president Mike Hovan|
Quanex Building Products Corp. is a manufacturer of engineered materials, components and systems primarily serving the U.S. residential door and window markets. Edgetech's involvement in the commercial marketplace is but one characteristic that made the acquisition attractive for Quanex.
|David Petratis, chairperson and chief executive officer of Quanex Corp.|
"Edgetech will allow us and be the facilitator to expand into the commercial market," David Petratis, chairperson and chief executive officer of Quanex added in the exclusive interview with USGNN.com. "Quanex has some great capabilities in our vinyl portfolio that can help commercial customers, and the joining together helps us to get in front of those specifying engineers. It's one of the attractive things that we believe help benefits both teams."
Edgetech's international presence, including facilities in the United Kingdom and Germany, are another potential advantage for its new parent. "It was an important part of the evolution of Quanex that we develop internationally and the merger brings us strength," Petratis said. "They've got some exciting international expansion and we want to continue to build on that momentum."
Hovan said a number of factors made Quanex an attractive buyer, among them, "The fact that they were in the same industry and understand the business was a big piece of it. Secondly, and probably the largest piece, was the real alignment of how Quanex goes to market and how they run their business compared to how we run our business; there was a very direct alignment of our core values as both a company and as individuals within the companies that we've had the pleasure of meeting. That's what we were looking for, somebody who has, frankly, the muscle to help grow the business to what we think it can be "
Petratis noted that discussions have been ongoing for much of 2010 and that Quanex is looking forward to the growth potential that this acquisition offers. "We've come to agreement with Edgetech and we look at this from a growth standpoint. A lot of headroom for growth," he said.
Petratis said that the acquisition must be approved by the Federal Trade Commission - typically in 90 to 120 days - before employee changes can be discussed. On the topic, he simply commented, "We're going to build on the people and capabilities that we've got. We think one of the attractive elements of Edgetech were the strengths of the leadership and the people that have made up the business."
Edgetech employees were notified this morning about the acquisition. "We started with our employees here as soon as the press release went out, as it did for Quanex before the markets opened," Hovan said. "We've tried to be as upfront and responsive as we can be in getting the message out and I'd say for the most part the feedback on the employee side has been positive. You can imagine that employees are nervous and it's the fear of the unknown and what that might mean, but I think once we explained why and they had a chance to hear who Quanex is, I think the mood's been very, very positive."
Both companies also are actively reaching out to customers to field questions about the announcement. In calling and writing customers, Hovan said he has found, "The message coming back so far is I would say somewhere between cautiously optimistic and very positive. I think people see value in both companies, in what we both bring to the marketplace and I think they inherently see the benefit of what we can collectively do and offer to our customer base."
Edgetech will be part of Quanex's Engineered Products Group; already a part of that group is Truseal. Petratis said Quanex expects the combined strength of these two companies "advances the technical capabilities, especially around energy-efficiency. We believe the envelope can be pushed and when you bring [together] the butyl-based technologies, single-edge technologies of Truseal and the foam-based, dual-sealed capabilities of Edgetech, we think those minds will help push that envelope," he added.
"I think if you start looking at all the potential opportunities and bringing together the technologies and people and the expertise that both companies have in energy-efficient products you come out with some pretty interesting potential in the future to help our customers grow," Hovan said.
Or, as Petratis neatly summarizes: "Together we're better."