Industry Reacts to Quanex Purchase of Edgetech
By Tara Taffera

Quanex Building Products Corp. announced in late-January that it had signed a definitive agreement with Lauren International to acquire Edgetech I.G. Inc. for $107 million in an all-cash transaction, everyone in the industry immediately started talking. The announcement seemed to evoke more questions than answers. Among them, how will competitors Edgetech and Truseal be integrated together? Several industry members who declined to be identified said that until they know how, or if, the two companies and technologies will be melded together, there isn’t much to say.

Others did already have opinions to voice, and that includes Bob Pecorella, president of Northern Building Products in Teterboro, N.J., a long-time Edgetech customer.

“It is savvy of Quanex to put Edgetech/Truseal under one roof,” says Pecorella. “Northern has been a user and supporter of warm-edge flexible spacer technology for more than two decades. Having them together under the same ownership is an unbeatable combination of the foremost technology for insulating spacer for our industry. They are very smart about doing this. It’s a win-win, except for those not making a warm-edge flexible spacer.”

Another question is how the merger of two major spacer suppliers will affect the competition.

GED is a competitor to both companies on the spacer side, and Dan Reinhart, director of sales, says his reaction was mixed when he heard the news.

“I was surprised, though nothing surprises me anymore in this industry,” he says.

Like many, Reinhardt agrees that there are many questions.

"It is savvy of Quanex to put Edgetech/Truseal under one roof."
—Bob Pecorella, president, Northern Building Products

“I think there was surprise and shock in the industry,” he says. “Customers are worried, what if they eliminate my product line? How will it affect my pricing?’ They [executives of both companies] said the right things—that they are looking for growth. I still think there are a lot of questions though.”

Gerhard Reichert was involved with Edgetech at its inception and is credited for helping invent Edgetech’s SuperSpacer product. He now serves as president of industry competitor Glasslam.

“It is certainly interesting news because I was inside Edgetech for many years so I know ideas of selling have been floated around in the past. But when it would happen was news to everyone,” says Reichert.

So was he surprised Edgetech was sold to Quanex?

“Yes and no,” says Reichert. “It’s a mixed bag. There are always changes in this industry. Mergers and acquisitions bring about different dynamics and this merger of two competitors will as well.”

Pecorella hopes the merger will provide access to improved technologies—at a better price.

“It’s good for all the people using one or the other because I hope it will give us good access to both at a competitive price,” he says.

Quanex and Edgetech Execs Express Optimism
By Megan Headley

Executives at both companies say they’re optimistic about what this merger of technology and expertise will mean for the industry.

Edgetech president Mike Hovan told DWM magazine that Edgetech parent company Lauren International has been looking for a buyer for the company that would better be able to allow the warm-edge spacer manufacturer to grow. “Lauren International … came to the realization that a parent with a little bit more capability would be in a better position to allow
Edgetech to continue to grow to the extent that we believe it can. It wasn’t an active strategy, it’s just been something that’s been in the backs of the minds of different people in Lauren International,” he said. “The opportunity arose, we started talking, and we are where we’re at today.”

“Edgetech will allow us and be the facilitator to expand into the commercial market,” David Petratis, chairperson and chief executive officer of Quanex, added in the interview. “Quanex has some great capabilities in our vinyl portfolio that can help commercial customers, and joining together helps us to get in front of those specifying engineers. It’s one of the attractive things that we believe help benefits both teams.”

Edgetech’s international presence, including facilities in the United Kingdom and Germany, are another potential advantage. “It was an important part of the evolution of Quanex that we develop internationally and the merger brings us strength,” Petratis said. “They’ve got some exciting international expansion and we want to continue to build on that momentum.”

Hovan said a number of factors made Quanex an attractive buyer. Among them was “the fact that they were in the same industry and understand the business was a big piece of it.”

He added, “Secondly, and probably the largest piece, was the real alignment of how Quanex goes to market and how they run their business compared to how we run our business; there was a very direct alignment of our core values as both a company and as individuals within the companies that we’ve had the pleasure of meeting. That’s what we were looking for—somebody, frankly, who has, the muscle to help grow the business to what we think it can be …”

Petratis noted that discussions began in 2010 and said that Quanex is looking forward to the growth potential that this acquisition offers.

"The opportunity arose, we started talking, and we are where we’re at today."
—Mike Hovan, Edgetech IG

Petratis said that the acquisition must be approved by the Federal Trade Commission—typically in 90 to 120 days—before employee changes can be discussed. On the topic, he simply commented, “We’re going to build on the people and capabilities that we’ve got. We think one of the attractive elements of Edgetech were the strengths of the leadership and the people that have made up the business.”

Edgetech will be part of Quanex’s Engineered Products Group, which also oversees Truseal. Petratis said Quanex expects the combined strength of these two companies to “advance the technical capabilities, especially around energy-efficiency.”

“We believe the envelope can be pushed and when you bring [together] the butyl-based technologies, single-edge technologies of Truseal and the foam-based, dual-sealed capabilities of Edgetech, we think those minds will help push that envelope,” he added.

DWM
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