Cimco Resale Deal Falls Through; New Buyer Sought
The Cleveland company that bought Cimco Inc. said it has reached a stalemate in negotiations to sell a portion of the business back to founder Russell T. Gilbert and is looking at other possible buyers.
M.A. Hanna Co., which bought Cimco four weeks ago, said it will continue to operate the 350-employee plastics molding business housed in three adjacent plants in Costa Mesa until a buyer is found.
The actions angered Gilbert, 65, who said late Wednesday that he was ready to complete the repurchase Feb. 9, when Hanna executives “decided they wanted more money than I was willing to pay.”
Though Hanna has asked Gilbert to be one of the bidders, he said the company attached conditions that are “so onerous that it, in effect, took me out of the bidding.”
Gilbert, who already had formed a company to take over the molding business, said he may file suit in an effort to force Hanna to sell the molding business to him. He said his attorneys have sent demands to the Cleveland company, but Hanna has yet to respond.
“I find it hard to believe anyone would offer more than I would,” Gilbert said. The Cimco board and its investment banker, PaineWebber, obtained bids last fall when the board was planning to sell all or part of the troubled company.
Gilbert said he offered Hanna 50% more than the highest of those bids to reacquire the molding operations. Under their tentative agreement, Gilbert would have paid $6 million to acquire 51% of the business. Employees and investors would have bought the rest.
Hanna’s actions sidetrack Gilbert’s plan to rebuild the core business he started 36 years ago and turn the operations over to employees in five years.
“We just couldn’t come to terms within the time period that had been set,” said Hanna spokeswoman Barb Gould. “We fully intend to sell the molding business and hope to reach an agreement within 90 days.”
Andy Opila, another Hanna spokesman, said the company won’t discuss details of how negotiations with Gilbert fell apart. “We just simply didn’t come to terms,” Opila said. “Hanna as a public company has responsibilities to its shareholders. . . . At this point, we have received interest from other buyers.”
Hanna has asked about a dozen companies to indicate by Friday their interest in Cimco’s molding business. At that point, the Cleveland company will start negotiating with bidders.
Hanna, a worldwide maker of specialty plastics and polymers, only wanted Cimco’s fast-growing Compounding Technology Inc. subsidiary, which makes plastic fillers with added qualities like strength and fire resistance.
Hanna, which supplied raw materials to Cimco, became a natural ally as Gilbert withstood a boardroom battle last summer and worked to return the money-losing plastics maker to profitability.
