In a move to build its position in armored/MC (metal-clad) cable and flexible conduit, Southwire Co. has agreed to buy Alflex, a subsidiary of Commonwealth Industries Inc., for $60 million.
In a stock purchase agreement, Southwire, Carrollton, Ga., said it will acquire all of the Alflex business, including manufacturing facilities in Long Beach, Calif.; and Rocky Mount, N.C. Both factories manufacture a variety of armored cable and flexible conduit products for the residential, commercial, industrial and OEM markets. The agreement is contingent upon regulatory approval and other issues common in these types of transactions. The acquisition, if approved, would be completed by the end of the summer.
Alflex employs approximately 310 people. During the first three months of 2004, Alflex sold 127.7 million feet of aluminum conduits for wiring, according to Commonwealth Industries. That amounted to $31.8 million in sales and $3 million in operating profits.
“Acquiring Alflex will allow us to expand our MC product line and will further strengthen Southwire’s ability to serve customers in the electrical products industry,” said Stuart Thorn, Southwire’s CEO. Southwire, now completing an expansion of its MC cable facilities in Carrollton, said the addition of Alflex’s manufacturing plants would give the company much-needed additional manufacturing capacity. It also would give Southwire access to some new products, including metallic flex and liquidtight conduit.
“Demand for armored cable continues to grow due to the proven 30 percent to 50 percent cost savings it provides over more traditional installation methods,” said Jack Carlson, president, Southwire Electrical Division. “By integrating Alflex products and manufacturing capacity within Southwire, we will be better positioned to meet that growing market demand.”
The proposed sale of Alflex by Southwire has been the subject of much speculation. Rumors of the proposed sale have been widespread since the National Association of Electrical Distributor’s annual meeting in San Francisco, May 15-19.
News of the Alflex sale did not surprise some manufacturers’ representatives for Southwire, who had heard about the acquisition before it was publicly announced. Southwire reps agreed Alflex is a good brand name, and that it would be a good addition to Southwire’s MC cable package.
With the completion of the sale pending, Southwire and Alflex reps are wondering whether Southwire will use separate rep sales forces for Southwire and Alflex, or have the same reps selling both lines. A Southwire spokesperson said it was “too early in the process” to know whether Southwire would retain all of Alflex’s employees or about any potential changes in its independent rep sales force. A decision is expected by the proposed closing, said the Southwire spokesperson.
Southwire entered the MC cable market in 1998 as part of a growth strategy to provide the electrical industry with a more complete line of wire and cable, according to the company.
Alflex was formed in 1968 to manufacture aluminum conduit. Before this, only flexible conduit from steel had been produced. In 1973, the company purchased its first casting and rolling mill in Torrance, Calif., enabling Alflex to produce the aluminum strip for its products. In 1978, Alflex acquired a facility in Carson, Calif., developing it into an aluminum continuous cast rolling mill. In 1978, Alflex relocated to a 120,000-square-foot facility in Long Beach, Calif.