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Oberon
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Interesting

#1 Post by Oberon »

Behind the Quanex-Edgetech deal
Sahely Mukerji, Glass Magazine
February 1, 2011
COMMERCIAL, RETAIL, FABRICATION


Officials at Quanex Building Products Corp., Houston, signed a definitive agreement with Lauren International, New Philadelphia, Ohio, to acquire Edgetech I.G. Inc., Cambridge, Ohio, for $107 million in an all-cash transaction, according to a Jan. 31 release. Closing will take place immediately upon conclusion of applicable governmental regulatory approval. The acquisition is expected to be accretive in year one, and additional information will be disclosed at closing.

Sahely Mukerji, senior editor, Glass Magazine, talked to Mike Hovan, president, Edgetech, and David Petratis, chairman and CEO, Quanex, about the acquisition. Below are excerpts from the interview.

Tell me more about the transaction. When do you expect to close? Will any of the three Edgetech facilities be affected? What about the employees?
MH: It’s dangerous to project, but just like any merger or acquisition, the government has to look at it to make sure everything looks copasetic.
DP: The government will look over the merger, and we’re confident that it’ll go through. We purchased with an eye on growth. There will be changes, but we believe in Edgetech’s growth.
MH: Part of why this acquisition makes sense is that there are a lot of opportunities for growth, and how we can service our respective customers.

Mike, what made Quanex’s offer attractive?
MH: We had a number of criteria we were looking for. Quanex is a company that understands fenestration as we do. For us, the fit between the two companies--the culture, the core values--is in alignment. We knew that Edgetech has lot of opportunities, and as a part of Lauren, we worked very well, but I think we needed a larger parent. And Lauren realized that as well, that at some point it had to let go to take our company to the next level, and Quanex was the right choice.

David, given the fact that Quanex owned TruSeal, what made Edgetech—with its competing technology—so attractive?
DP: We believe that the banner of energy efficiency needs to be pushed and developed. Both Edgetech and Truseal push that in that arena. Dual-seal and single-seal technology have found their place among the customers. Bringing those minds together will create a positive and new thinking, which the industry needs to provide homeowners and building owners more energy-efficient solutions.

What about international capabilities?
MH: Edgetech is well positioned internationally. It fills a growth need for Quanex. We’re investing to build our solar capabilities internationally, and plugging in our Edgetech capabilities will move things faster. Edgetech’s development and manufacturing capabilities in the U.K. [are] mature, and the company has announced a new facility in Germany. It complements the growth and aspiration of Quanex and its businesses.

Could you discuss specific technologies?
DP: When you bring great minds together, you can push the energy efficiency envelope. For instance, the Fenestration Imperi Clad system: Mikron and HomeShield came together to create an industry-rated door system. Another great example is how the Mikron and Truseal teams collaborated to design the Energy Core window. Bringing minds and technologies together to solve issues for more energy-efficient solutions for customers is what we strive to do best.

What other products will you work on besides spacers?
MH: IG is where Edgetech’s strengths are. Quanex helps bring to the table a group of people that we can now collaborate with to bring new products. The more we get those people in a room talking, the more we get better products. When we start doing that in products with a focus on fenestration, you never know what you’re going to come up with. Good people and good ideas will definitely bring new products.
DP: Edgetech brings the foam and dual-seal technology, Truseal brings butyl technology, and each company brings its respective customers. Our technical people get in touch, work together, and grow together.

Is there a place in the market for both Duraseal and Super Spacer products long term? Are they complementary technologies? Or will Quanex be looking to bring the best of both together?
DP: There’s a role for both, and our respective customers have validated that.
MH: I would agree. Some of those technologies might result in new technologies. The opportunities to bring our collective customer base together will create new products in the field of IG and fenestration in general.

Will customers of either Edgetech or TruSeal see any immediate changes?
DP: Internally and externally, they should expect the companies to embrace each other. There will be no major changes. But companies evolve as they grow. Neither Edgetech nor Quanex are today what they were when they started.
MH: We’ll continue to offer the best. We’ll continue to serve our customer base, and now an extended customer base. We have a justified reputation in the industry, and where we can, we’ll improve on that.
DP: Together we will be better at designing energy-efficient window and door components and systems.

Both Truseal and Edgetech have traditionally had strong marketing programs to support manufacturers using their products. How do you foresee those changing?
MH: Our marketing strategies are with the intent of helping our customers be successful. We work with our customers to make them more successful. We’ll have added resources to enhance that. Whatever we can do to make our customers successful, we’ll do, and the marketing piece is only one part of that.
DP: A year ago, we talked to the market about project Nexus to bring together the HomeShield, Mikron and TruSeal technology and sales force teams. If we can give our customers the ability to have Edgetech help us build on that, and we can work together to build systems and products that add value to the customers, and do that in a blended way, we can be more successful. With our respective technical products, we’ll help the customers grow. We believe fenestration customers should [have access to] component solutions [and] energy efficiency to advance their businesses, and this acquisition will allow them to do so.
MH: Together we’re better. That’s really the message that we have moving forward. [Our] ability to service our customers is better, and we’re stronger. It’s one of those rare instances that is positive from all aspects: for our customers, employees, teams and shareholders.

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