Onex to acquire Husky Injection Molding Systems for $960 million

Hey there, time traveller!
This article was published 28/09/2007 (6624 days ago), so information in it may no longer be current.

TORONTO – Husky Injection Molding Systems Ltd. (TSX:HKY) has agreed to be taken over by Onex Corp. (TSX:OCX) in a $960-million deal that enables founder Robert Schad to relinquish control of the company with an expectation his values will endure.

The companies said Friday that Schad, Husky’s chairman, has undertaken to accept the proposal. He and his wife hold 44 per cent of the company’s stock.

The deal will allow Husky to “go on and be able to build itself in the original vision that Robert Schad had intended,” CEO John Galt said in an interview.

The 3,000-employee maker of factory machines to produce plastic products ranging from bottles to bumpers regularly ranks among Canada’s best places to work and most environmentally conscientious enterprises.

Schad founded Husky in’53 as a machine shop after he immigrated from Germany, and put it up for sale in March, saying he wanted to sell his stake and donate the money to charities and environmental causes.

His concern for the environment is evident in the way the company runs its plants: they feature pesticide-free landscaping and healthy-food cafeterias and have radically minimized greenhouse-gas emissions and waste.

“Robert Schad, being 78 years old, made the decision that it was time for him to consider the next step in ownership for the company,” Galt said.

“He also wanted to do that at a time when he could be in control and make sure the company he built was moved into the right hands.”

Schad said Onex was the right long-term home for Husky, since that company had shown “a solid appreciation of Husky’s strategy and strengths, and bring expertise in a number of areas that will help take the company to the next level.”

The $8.18 per share in cash offered by Onex is a premium of eight per cent over Husky’s closing price Thursday and 39 per cent over its price on March 7 before the company announced it was open to proposals.

Galt said Husky met various interested parties during the six months it was for sale, and Onex “got to know us thoroughly, they liked the combination of innovation and technology, they saw our leading global position, and we thought in getting to know them that they brought to the plate a lot of advantages.”

Among those, he said, were the global experience, financial depth and experience in mergers at the Toronto-headquartered conglomerate headed by Gerald Schwartz.

The Onex deal isn’t expected to result in any direct job cuts “while maintaining the culture we have,” said Galt, who took over as CEO from Schad two years ago.

He said Onex will allow Husky to stick to its plans to grow while becoming faster and more efficient – an important focus in light of the high Canadian dollar.

Onex, with $37 billion worth of stakes in companies including Celestica, Spirit AeroSystems, Allison Transmission, Emergency Medical Services, Hawker Beechcraft and Cineplex Entertainment, had said Wednesday it had $2 billion ready to invest and “opportunities that are just staggering.”

Onex managing director Anthony Munk, son of Barrick Gold chairman Peter Munk, said the conglomerate is “delighted to be partnering with Husky’s management team and look forward to building on its history of product innovation and technology leadership.”

Galt said Husky’s management team expects to remain and fully backs the deal.

“Asia-Pacific as a whole, India, are tremendous growing markets for us, central and eastern Europe also,” Galt said, noting that Husky already has “a very strong footprint” in the Americas, western Europe and Japan.

Shareholders will vote on the transaction Dec. 6, with the deal expected to close by mid-December.

Headquartered in Bolton, north of Toronto, Husky has factories in Canada, the United States, Luxembourg and China, and customers in more than 100 countries.

The company now claims 70 per cent of the global market for pop-bottle machinery, and has diversified into automotive, packaging and telecommunications applications.

Along with the takeover announcement, Husky, which reports in U.S. dollars, said it earned $21.3 million or’ cents a share on sales of $321.2 million in its fourth quarter ended July 31, up from $2.2 million or two cents per share on $248.2 million a year earlier.

For the year, net income was $41.7 million or 36 cents per share, compared with $25.7 million or 22 cents per share in the prior year. Sales were $1.1 billion, up 15 per cent from $935.3 million.

Husky shares gained 43 cents or 5.7 per cent to close at $8.01 on the TSX. Onex closed up 25 cents at $36.55.