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1987 FIN – Banner Moves Deeper Into Fastener Field Via Acquisition of Rexnord

December 20
00:00 2012

1987 FIN – Banner Moves Deeper Into Fastener Field Via Acquisition of Rexnord

By Dick Callahan, FIN Editor
February 12, 1987 FIN – Banner Industries Inc., New York, New York, made a tender offer to buy the 80% of Rexnord Inc., which it does not yet own for about $525 million. 
Banner already owns about 20% of the company, buying the stock on the open market for about $100 million.
Although there was some initial resistance to the Banner offer, a definitive agreement calling for Banner to acquire Rexnord has been unanimously approved by the directors of both companies.
Easing the way for such an agreement was probably Banner’s pledge to keep Rexnord’s senior management in their jobs and add Rexnord’s chairman and CEO, Donald Taylor, to Banner’s board.
In acquiring a company approximately five times its own size, Banner is relying heavily on junk bond funds already raised through Drexel Burnham plus additional funds to be raised by Drexel and a bank group reportedly led by Citibank.
The significance of the Banner Rexnord deal, at least to FIN readers, is that it moves Banner from the marketing of other companies’ fasteners into the manufacturing of fasteners with the acquisition of Rexnord’s three fastening groups.
Banner Industries was incorporated in Delaware in 1968. The company’s business consists of two major segments: the Aviation Aftermarket is engaged in the worldwide distribution of aircraft hardware replacement parts and new and retreaded aircraft tires; the Products for Industry business is engaged in manufacturing capital goods for industry. Together these two business segments employ about 1,100 people worldwide.

The Aviation Aftermarket segment is made up of the following groups:
Adams Industries Inc., Suffield, Connecticut, distributes aircraft fasteners, fittings and electrical and hydraulic systems components to aircraft engine and frame manufacturers worldwide. A 30,000 sq ft production facility is located one two acres in Suffield. Gene Longo is manager of this group.
Banner Aircraft International Inc., South San Francisco, California, supplies aircraft parts including airframe and structural components and engine parts to airlines and OEMs worldwide. There’s an 8,000 sq ft facility in San Francisco and an 18,000 sq ft facility in Sun Valley, California. Roger C. Cain is manager of this group.
Burbank Aircraft Supply Inc., Sun Valley, California, supplies aircraft hardware, fasteners, electrical and related items to airlines and overhaul facilities worldwide. There is a 122,000 sq ft facility in Sun Valley. Leon J. Brenner is manager of this group.
NASAM Inc., South San Francisco, California, supplies private aircraft and commercial aircraft parts, high tech aerospace electrical and industrial components to foreign militaries and high tech industrial manufacturers out of a 2,000 sq ft operation in San Francisco. M (Aki) Sato is manager of this group.
Solair, Inc., Ft. Lauderdale, Florida, acquired in August 1986, supplies avionics, instruments and airframe components to airlines and overhaul facilities worldwide. Leo Bial and Michael Weinberg manage this operation.
Thompson Aircraft Tire Corp., Miami, Florida, is the world’s largest rethreader of aircraft tires.  It supplies retreaded and new aircraft tires and wheel overhaul services to airlines worldwide and to the U.S. military. Facilities include 20,000 sq ft in Hauppauge, New York; 6,000 sq ft in College Park, Georgia; 60,000 sq ft in San Francisco; 60,000 sq ft in Miami, Florida; and 84,000 sq ft in Frameries, Belgium.  Arthur I. Hitchen is manager of both the domestic and international operations.

The Products for Industry business is made up of the following groups:
Banner International Inc., Willard, Ohio, distributes a wide variety of locomotives and lift trucks and material handling equipment for applications in mining, industry, automotive warehousing and construction. There’s an 11,000 sq ft facility in Willard. Miles W. Christian is manager of this group.
Commercial Castings, Inc./Reymond Machine, Inc., Midvale, Ohio, supply castings and clay machine equipment to brick and ceramic products manufactures. Combined facilities in Midvale total about 13,000 sq ft. Harold Laser manages these groups.
Patterson Pump Co., Toccoa, Georgia, supplies water and sewage pumps, metal fabrications, chemical processing equipment and valves to power plants and to the chemical processing industry. Patterson in 1986 became the exclusive distributor in North America of submersible water and sewage pumps and specialized pumps for the oil and chemical processing industries manufactured by Thyssen Macninenbau GmbH of West Germany. There’s a 127,000 sq ft facility on 31 acres in Toccoa. Albert Huber is manager of this group.
Plymouth Locomotive Works Inc., Plymouth, Ohio, produces industrial mining, and tunneling locomotives; heavy duty industrial lift trucks; narrow aisle, stacking and material handling equipment; and extrusion equipment for applications in mining, automotive warehousing and construction; and ceramic product manufacturing. There’s a 193,000 sq ft facility on 20 acres in Plymouth. Thomas Gleason is manager of this group.
Pompes Deplechin S.A., Tournai, Belgium, produces chemical, water and sewage pumps plus other process pumps to industrial markets, including the food processing, oil, sugar refining and chemical industries. There’s a 49,000 sq ft facility in Tournai. Pierre Mat is manager of this group.

Banner sold two of its operations in 1986. In February, Technical Devices Inc., which manufactures wave soldering and electronics components assembly tools was sold and in July Banner sold Skinner Engine Co. Inc., a producer of intensive mixers and reciprocating steam engines. In fiscal 1986 these two subsidiaries had combined sales of about $11 million.
Banner’s net sales in fiscal 1986 (ended June 30, 1986) were $149.4 million (up 17% from $127.9 million in fiscal 1985). Net income was $6.6 million or $1.50 per share (up 62% from $4.0 million or $1 per share in fiscal 1985). Net income was a record for the company but sales were not. In the years 1978 through 1982 sales were higher each year than for fiscal 1986, the best year being 1981 when sales hit $206.2 million.
Fiscal 1986 sales of the Aviation Aftermarket group were $98.7 million and represented 66% of the company sales. A total of 56% of the group’s sales were outside the U.S.
Sales for the Products for Industry group were $50,644 million in fiscal 1986. Overall, foreign sales for the two groups totaled about $60 million (accounting for 41% of consolidated sales).
The management picture has changed considerably since October 1985 when Samuel J. Krasney, then president, sold most of his interest in the company to Jeffrey J. Steiner.

Here’s a short “Who’s Who” in Banner Management:
Steiner, chairman, CEO and director, a 49-year-old, Austrian born entrepreneur, became chairman when he bought a 24% share in the company from then ailing Samuel J. Krasney.
A recent article in Business Week (February 9, 1987) provides some details about Steiner’s background. It says that Steiner, the son of a Jewish textile manufacturer, left Austria as a child during World War II and went first to his mother’s native Turkey before going to England where he was trained as an engineer. He worked for Texas Instruments Inc., where he ran several international operations. Later he invested in a number of private European companies doing turnkey engineering jobs. Steiner, according to Business Week, is a friend of Nelson Peltz (who built Triangle Industries with the help of Drexel Burnham’s junk bonds) and is the largest investor in Peltz’s Central Jersey Industries Inc. (Triangle, in turn, holds 200,000 shares or 4% of Banner).
Samuel J. Krasney, vice chairman, chief operating officer and director, who built Banner from a near bankrupt company (with $2 million in annual sales) to a thriving enterprise, sold 969,000 shares of Banner common stock in 1985 to Paske Investment Ltd., a company owned by a trust for the family of Jeffrey Steiner. Krasney (who with his family still owns 126,000 shares of Banner) has an agreement to continue as vice chairman and chief operating officer until June 1990.

Rene Charvillat, president and director, joined Banner as president in 1986. He previously was executive vice president of Poliet S.A., a Paris-based holding company, and chairman of SAMC, also of Paris.
Others on the management team include:  William C. Hunt, senior vice president and director; Michael J. Alcox, vice president, finance; Sam Spector, vice president; Nedim Sadaka, treasurer and director; and Warren D. Persavick, controller, assistant treasurer and assistant secretary. ©1987/2012 Fastener Industry News
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1987 FIN � Rexnord’s History
Rexnord Inc., Brookfield, Wisconsin, was founded in 1892 and is now a diversified manufacturer of components, factory automation systems engineered materials and machinery for raw material processing, mining, transportation, defense/aerospace and agriculture. Annual sales now exceed $1 billion.
The name Rexnord came from the merger in the early 1970s’s of Rex Chain Belt, a manufacturer of material handling equipment, and Nordberg, a heavy machinery builder.
In recent years Rexnord has been making an effort at turning itself into more of a high tech operation. Last year Rexnord announced that as part of a recapitalization effort the company had set up a divestiture program to sell off five units including: Fairfield Mfg. Co., Lafayette, Indiana (gears); Materials Handling Division, Danville, Kentucky (conveyor systems); Railway Equipment Div., Milwaukee, Wisconsin (equipment for maintaining railway beds); Process Machinery Div., Milwaukee, Wisconsin (aggregate processing equipment); and Bellofram Corp., Burlington, Massachusetts (relays, transducers, diaphragm seals and assemblies). These units have total sales of around $400 million annually.
Plans were to restructure the company in such a way that an Employee Stock Ownership Plan (ESOP) would own 30% of the company. That idea, as a result of Banner’s purchase offer, has been scrubbed, but chances are that most of the divestitures already announced will probably go forward. That would leave Rexnord with mechanical power operations (including transmission chains and components); plastics; chemicals; water pollution control equipment; process controls and instrumentation; and specialty fasteners.
• Rexnord Specialty Fastener Division, headed by Ben Prescott, president, is headquartered at 3000 West Lomita Blvd., Torrance, California 90505. The division has three groups concerned with fasteners: Rexnord/Camloc; Rexnord/Tridair; and Rexnord/Rosan.
• Rexnord/Camloc, Hasbrouck Heights, New Jersey (acquired in 1967) offers a large standard line of fasteners and also produces specialty 1/4 turn fasteners, inserts, and tension products. John Trotter is general manager.
• Rexnord/Tridair, Torrance, California (acquired in the late 1970’s) offers lock nuts, threaded inserts, and quick operating structural panel fasteners. Rexnord/Tridair last year spun off a group, now called Rexnord Aerospace Mechanisms, which offers aircraft latches and spacecraft mechanisms. Paul Gross is general manager of Tridair and John Stammrich is general manager of Aerospace Mechanisms.
• Rexnord/Rosan, Santa Ana, California (acquired in the early 1980’s) produces threaded inserts and studs and Delron sandwich panel inserts. Frank Copple is general manager.

Rexnord was also until recently the parent company of Rockford Products, Rockford, Illinois, which it acquired in 1976. This company was sold to its management via a leveraged buyout in 1985. At the time of its sale, Rockford Products accounted for about 60% of Rexnord’s fastener business. ©1987/2012 Fastener Industry News
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