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Home » Sandvik to acquire Valenite

Sandvik to acquire Valenite

June 25, 2002
More about:  Europe,  Industrial,  Mergers/Acquisitions
Sandvik has signed an agreement with Milacron Inc., USA, to acquire its North American metal-cutting tools business Valenite for US$175 million. Valenite posted 2001 revenues of $200 million with an operating profit of $3 million. Jim Baker, president of Sandvik USA, said that Valenite will operate as a separate company within the Sandvik Tooling business area, and will retain its own identity and sustain its own research and development, manufacturing, marketing and distribution channels. Anticipated profit margin improvement will derive from an ongoing efficiency program and operational cooperation with Sandvik Tooling, including production, technology, logistics and research and development initiatives.


Valenite is a supplier of highly engineered metal-cutting tooling solutions ...

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Sandvik has signed an agreement with Milacron Inc., USA, to acquire its North American metal-cutting tools business Valenite for US$175 million. Valenite posted 2001 revenues of $200 million with an operating profit of $3 million. Jim Baker, president of Sandvik USA, said that Valenite will operate as a separate company within the Sandvik Tooling business area, and will retain its own identity and sustain its own research and development, manufacturing, marketing and distribution channels. Anticipated profit margin improvement will derive from an ongoing efficiency program and operational cooperation with Sandvik Tooling, including production, technology, logistics and research and development initiatives.


Valenite is a supplier of highly engineered metal-cutting tooling solutions to the North American market. The company, with about 1,300 employees, has its head office in Madison Heights, MI and manufacturing facilities in South Carolina, Michigan and Texas. While 2001 results were strongly affected by the recession in North America, the business historically achieved an average operating margin of around 10 percent.


While Sandvik acquires Valenite for $175 million; goodwill is preliminarily estimated at approximately $100 million after restructuring costs. While the acquisition is expected to be marginally dilutive to Sandvik's earnings in the first year, Sandvik is confident that Valenite can achieve margin enhancements above the historic trend within a few years.


'Through the acquisition of Valenite, we will enchance our position in the North American market,' said Anders Thelin, president of the Sandvik Tooling business area. 'Valenite is a very well-known brand and the company has a strong sales and marketing organization.

Valenite will enhance the current operations of Sandvik Tooling within the metalcutting industry by broadening our customer base, especially in the automotive industry. Through its global strength, Sandvik will enhance Valenite's product program and competitive ability and further develop the total offering to the customer.'

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