Oak Industries Signs to Acquire Railway Company
Oak Industries has signed a definitive agreement to acquire Railway Maintenance Equipment Co., a Milwaukee-based subsidiary of Rexnord, for an undisclosed amount, Oak said Wednesday.
San Diego-based Oak Industry expects to conclude by next week a previously announced acquisition of the Quartz Crystal Components Group that is owned by New York-based Electronic Technologies.
Rexnord, a Brookfield, Wis.-based conglomerate that is being acquired by Cleveland-based Banner Industries, is selling the RMEC subsidiary as part of repositioning that will trim five business divisions that generated $400 million in 1986 revenues. RMEC, with $16 million in revenue, was the third business to be sold.
Oak and Rexnord declined to reveal the terms of the deal that is expected to close by the end of April, but Oak Chairman E.L. McNeely described RMEC as profitable.
Oak expects to use tax benefits generated by a $125-million net operating loss carry forward to shelter the cash flow of RMEC and other anticipated acquisitions, according to McNeely.
Rexnord identified RMEC as one of the nation’s largest manufacturers of rail bed maintenance equipment. Ninety percent of its sales are to railroads, with annual revenue in excess of $50 million, according to Rexnord.
Oak expects to keep the existing RMEC management team in place after the acquisition, according to McNeely.
Oak’s December bid for the Quartz Crystal Components Group likely will be
completed next week, according to McNeely. The company reported $18.7 million in 1985 revenue.
Just a week ago, Oak, which produces electronic components and controls, reported a $3.8-million loss and $42.5 million in sales for its 1986 fourth quarter. Oak posted a $60-million loss on continuing operations and $151.7 million in sales for the year.
However, Oak reported a $60-million net income for the year, largely because of the sale of its materials business to Allied-Signal Inc.
McNeely predicted that Oak’s continued restructuring would produce a profitable year in 1987 even without the addition of the Quartz Crystal Components Group and RMEC.
