NI Industries Inc., a Long Beach-based diversified manufacturing company once known as Norris Industries, agreed Monday to be acquired by a company controlled by Taylor, Mich.-based Masco Corp. for about $460 million cash.
Shareholders controlling 13.3 million shares of NI Industries, or about 60% of the outstanding shares, have already promised to sell their stake at an average price of about $20 per share, the companies said in a joint announcement.
Those shareholders include partnerships affiliated with Kohlberg, Kravis, Roberts & Co., the private New York investment firm that arranged a private buy-out of Norris Industries' public shareholders in 1981 for $420 million in cash.
In October, 1983, Norris, by then renamed NI, went public again after selling about 26% of its shares in a public offering.
NI was the fifth most active issue traded Monday on the New York Stock Exchange, closing at $21.50, up $3.75, on a volume of 1.57 million shares.
$22 per Share Offered Under the terms of the definitive agreement announced Monday, NI's public shareholders will be offered $22 per share by Nimas Corp., a newly formed company that is 75% controlled by Masco Corp. The name was coined from the first letters of NI and Masco, according to Dick Owens, NI chief financial officer.
Nimas has also gained an option to purchase 4.1 million authorized but unissued shares of NI Industries at $22 per share.
The merger is the largest in Masco's 56-year history, according to Norbert W. Truderung, an analyst with Northern Trust Corp. in Chicago, who noted that Masco has a history of acquiring "market leaders of low-cost products," using economies of scale to improve the profit margin. At the same time, Truderung said, Masco has been remarkably successful in retaining the top management of the companies it acquires.
Under the terms of the merger agreement, NI's management will continue in their same jobs, Owens said, and the companies do not anticipate laying off any of NI's 9,600 employees. Owens, noting that the two companies both manufacture door locks and plumbing faucets and fittings, said the merger proposal must be reviewed by federal antitrust agencies but said the two companies do not anticipate "any real problem at all."
Owens, a 15-year employee at NI, said the company had hoped to grow through acquisitions this year but had been unsuccessful. At the same time, NI's stock price was "greatly depressed," Owens said, in part because a majority of shares was held by the investors who had taken the company private in 1981.
Owens said NI concluded that it could grow more rapidly by combining forces with Masco.
Although some analysts hesitated to assess the merger before attending a meeting scheduled by Masco in New York today, both Truderung and Jonathan Goldfarb, an analyst with Merrill Lynch, Pierce, Fenner & Smith in New York, said it appeared to be a good fit of the companies' product lines.
Both men praised the business acumen of Masco's management, led by a father-son combination of Alex Manoogian, chairman, and Richard Manoogian, president and chief executive.
Richard Manoogian did not return a reporter's calls Monday.
2 Missteps in Decade "It's one of the top growth companies in American industry," said Jonathan Goldfarb, According to Goldfarb, Masco has reported a "compounded growth rate of close to 20%" for the past 27 years.
Truderung said he could cite only two missteps in the past decade, counting Masco's ventures into citizens band radio manufacturing and oil field equipment manufacturing as ill-timed.
Nimas is 50% owned by Masco Corp. and 50% owned by Masco Industries Inc. The latter company was formed in July, 1984, when 55-year-old Masco Corp. spun off its industrial and oil field operations. Masco Corp. retains a 50% stake in Masco Industries, which is also headquartered in Taylor, Mich.
After the merger, Nimas said it plans to sell NI's building-related products unit, which generates about 40% of the company's sales, to Masco Corp. for about $150 million. That unit manufactures plumbing fixtures, Weiser locks, Thermador and Waste King appliances, Artistic Brass decorative faucets and Bowers electrical outlet boxes.
The remainder of NI is involved in industrial and defense manufacturing.
Masco, which manufactures faucets, ventilation equipment, recreational vehicle equipment and other products, closed at $29.75, up $2.125, with 113,900 shares traded Monday on the New York Stock Exchange.
For the nine months ended Sept. 30, 1984, NI Industries reported net income of $43.9 million, up 53% from the same period in 1983.
Sales for the nine-month period rose 12% to $613.9 million.
For the same nine-month period, Masco Corp. reported net income of $94.2 million, up 23% from the previous year, on sales of $805.0 million, up 2%.
Masco Industries reported net sales of $415.9 million for the nine months ended Sept. 30, up 33%.
Net income for the same nine-month period declined 20%, however, to $19.2 million.