AFG to Buy Ford’s Glassmaking Unit in All-Cash Deal
Cash-rich AFG Industries advanced a notch in its quest for domination of the construction and specialty glass industry Thursday, agreeing to purchase the Canadian glassmaking subsidiary of Ford Motor. The move would make AFG one of the largest glass manufacturers in North America.
Officials at Irvine-based AFG refused to disclose how much the company will pay for Ford Glass Ltd., but said it will be an all-cash deal. One industry analyst estimated the sale price to be in excess of $100 million.
Ford Glass projects 1987 revenue of about $140 million in U.S. currency. It is “the largest flat glass company in Canada, with 45% of the market share,” said Les Werkstell, an analyst with First Manhattan in New York.
The purchase, he said, is an important step in AFG’s “strategy to be a large, national, fully integrated distributor of glass.”
Fills Manufacturing Gaps
Although Werkstell contended that the Ford Glass acquisition--combined with AFG’s construction of two new U.S. plants--will make AFG the largest flat-glass maker on the continent, AFG officials said they will still rank second behind giant PPG.
AFG currently is the nation’s fourth-largest manufacturer of flat glass, which is used mainly in residential and commercial construction. It is also a major manufacturer of specialized glass products for oven doors, aquariums and other uses.
In addition to giving AFG a presence in Canada, where previously it had none, the acquisition of Ford Glass also fills in some of AFG’s manufacturing gaps.
It brings the company a state-of-the-art mirror manufacturing line and a facility for making reflective glass for high-rise buildings, said R. D. Hubbard, AFG’s chairman.
The Canadian company “is profitable, although less so than AFG is in the States, so there are opportunities for (profit) margin improvement,” Werkstell said. “AFG management will be able to improve margins and make it a more profitable operation than it is today.”
AFG reported $452 million in revenue and a net profit of $53 million for 1986.
Gerald R. Odening, an analyst with Shearson Lehman Bros. in New York, said that AFG was the winner in a “bidding war” for Ford Glass, probably paying between $100 million and $150 million.
The acquisition heralds a new era for AFG, which only months ago tried unsuccessfully to take over Gencorp, an Akron, Ohio, conglomerate, and Lear Siegler, the Santa Monica aerospace and manufacturing giant.
“Hubbard has publicly said he is going to stay in the glass business and doesn’t want to diversify, which is a sudden reversal of his intentions a year ago,” Odening said.
D. Roger Kennedy, AFG’s vice president for marketing, said the transaction should close by Dec. 31, after receiving approval from both companies’ boards and the Canadian government.
“We don’t anticipate any problems in that area,” Kennedy said. “AFG will operate FGL as an autonomous, wholly owned subsidiary. . . . These opportunities we have in the glass industry will keep us busy for some time.”
AFG stock closed Thursday on the New York Stock Exchange at $29.25 a share, up $1 from its close Wednesday.
