AFG Industries Buys Two Chains of Glass Installers, Seeks Further Acquisitions
AFG Industries, one of the investors pushing the takeover of giant Gencorp, said Wednesday that it bought two small chains of auto glass installers this week and will pursue its goal of becoming a major player in the market of auto replacement glass.
The purchase of the two privately held chains comes just five months after AFG, the Irvine-based maker of residential and specialty glass, unsuccessfully tried to become the nation’s largest auto glass retailer by acquiring Lear Siegler Inc.’s Safelite division through a billion-dollar takeover of its parent.
AFG officials said Wednesday that the current effort to take over Gencorp, the Akron conglomerate that makes General Tires, also fits in with its auto glass designs. If the takeover is successful, the company said it would consider placing auto glass outlets in Gencorp’s General Tire retail outlets.
“We want to be a major player in this industry,” said Gary Miller, AFG treasurer, who added that the company is looking for other auto glass acquisition targets.
35 Retail Outlets
This week’s acquisition of A-1 Quality Glass, a 23-store chain based in Salt Lake City, and Tempo Auto Glass, a four-store chain with headquarters in Tacoma, gives AFG a total of 35 retail auto glass outlets throughout the nation--enough to qualify as one of the larger companies in this $1.8-billion-a-year, fragmented industry.
Although AFG did not reveal the prices it paid for the two chains, sources placed it at less than a total of $10 million.
AFG has been so anxious to enter the auto glass market that late last year it teamed up with another investor to launch a hostile, $1.4-billion takeover of Lear Siegler, a giant conglomerate with far-flung aerospace and manufacturing operations.
If the Lear Siegler takeover had been successful, AFG planned to take the 262-store Safelite chain, the nation’s largest auto glass retail chain, and merge it into its operations. Last August AFG bought a glass distributor whose operations included eight retail auto glass shops in the Texas and the Southeast.
Miller said the company entered the auto glass business because of its conviction that it needed a second major product line in order to continue its growth rate. The company now has sales of about $450 million per year from its residential and specialty glass operations, but executives have forecast a leveling off in sales in two years unless a new product line is acquired.
In general, analysts praised AFG’s move and Wall Street investors, who had been cool to the company for its move on Gencorp, apparently approved of the strategy as well. AFG’s shares increased $1 to close at $38.625 on the New York Stock Exchange Wednesday.
