Elk Grove Village is home to an army of workaday manufacturers–small to medium-size companies that anonymously make the parts and pieces of products that big guys like A.B. Electrolux’s Frigidaire unit or Chrysler Corp. assemble and sell across America.
One of these factory foot soldiers may soon be missing in action. Material Sciences Corp., which paints steel coils that go into Frigidaire refrigerators and Chrysler Sebring convertibles, learned last week that a competitor, Sequa Corp., has bought 8.8 percent of its stock and wants to buy part or all of the company.
Material Sciences says its board has reaffirmed that the company is not for sale and isn’t interested in talking with New York-based Sequa about anything. But Sequa, an industrial conglomerate that also precoats steel for building and commercial products, is hungry and seems to have wads of cash.
Over the last year, Sequa has made three “niche-filling” acquisitions, as the company calls them. Among them: the purchase last September of industrial-equipment maker TEC Systems of DePere, Wis., from W.R. Grace & Co. And the $13.77 million it spent on Material Sciences stock came from its own cash flow.
Investors appear to be betting on Sequa, albeit cautiously.
Shares in Material Sciences, which employs about 1,300 people, closed at a 52-week low of $10 a share on May 20–just as Sequa was secretly building its stake. Once Sequa’s holdings were made known June 1, the stock jumped more than 20 percent. It has since slipped some and closed Wednesday at $11.12 a share.
Kingdom: By month’s end, Ryerson Tull Inc. is expected to be a freestanding company as its corporate parent, Inland Steel Industries Inc., splits in two with the $1.43 billion sale of its Inland Steel Co. unit to Ispat International N.V.
But Ryerson won’t be rid of Inland’s bete noire, shareholder Alfred Kingsley. Through his Greenway Partners LP, Kingsley recently boosted his stake in the publicly traded shares of the Chicago-based Ryerson to 6.8 percent.
Indirectly, Kingsley owns even more. Greenway holds a 9.5 percent interest in Inland Steel, which, in turn, owns 87 percent of Ryerson–at least until the Ispat deal is wrapped up.
Kingsley, who had pressed Inland Steel to fully spin off Ryerson since early 1997, is keeping every option open when it comes to Ryerson. He says he bought the shares in late May because he thinks they’re still underpriced and may buy more stock–or he may sell them all back.
As for Ryerson’s future as an independent company, he says in an interview that it “may be a fine stand-alone company or it could be acquired, either way.” The decisions are up to CEO Neil Novich, though he adds, that he’ll be watching from his New York office.
For its part, Ryerson seems to be plugging along. The company says it will build a $4 million plant in Berkeley, S.C., to process and distribute steel from Nucor Corp.’s mill there.
At home: Fort James Corp. is officially at home in Deerfield.
The paper company began moving executives here shortly after its creation last summer in the merger of James River Corp. of Richmond, Va., and Fort Howard Corp. of Green Bay. But the new Deerfield headquarters wasn’t formally designated as “corporate headquarters” until this week.
“It’s dumb to be calling one the executive headquarters and the other the corporate headquarters when in truth this is now the corporate and executive headquarters, and we ought to call it that,” said Chuck Wilson, vice president of corporate affairs.
Fort James took this move carefully to avoid sending some shock waves through Richmond, where the company has been a major civic presence. In announcing that Chicago is now home, Fort James also pledged $1 million to support Richmond’s canal-walk project and promised the company will “maintain all of the commitments it has made to civic and charitable groups in Richmond and will continue to retain its leadership role as a corporate sponsor of community activities.”
Flip side: Deregulation is good or bad, depending on your point of view–and that can change by geography. Consider Dominion Resources Inc. of Richmond, Va., which sees opportunity and bad times.
Just two weeks ago, Dominion announced it’s joining forces with Peoples Energy Corp. here in Chicago to get into the electricity business. The two energy companies will convert a mostly unused Peoples plant in Elwood, near Joliet, to a natural gas-powered electricity generating plant. The idea is to sell electricity on the open market next summer in Illinois’ newly deregulated market.
But this week, Dominion bemoaned that a deregulation bill under consideration in Virginia would mean the company’s main subsidiary, Virginia Electric and Power Co., will have to take a charge against earnings. The utility would have to give $700 million in refunds and rate reductions over the next four years, plus write off $220 million in assets.
Beijing dunk: Rayovac Corp. thinks Michael Jordan isn’t an American icon, but a world one. The Madison, Wis.-based battery maker plans to begin selling in China this summer, using television ads and store displays featuring the Chicago Bulls star.
“Even though they’ve never seen a game live, he is a very big name in the Far East,” said Rayovac spokesman John Daggett.
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E-mail Michael Arndt at MArndt@Tribune.com.
E-mail Sallie L. Gaines at SGaines@Tribune.com.
