Elamex announced today [Monday] that its board of directors has approved, subject to necessary shareholder approvals, the acquisition of 100% of Mt. Franklin Holdings LLC.
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Franklin owns 100% of Franklin Connections LP, a general line candy manufacturer with a current annual installed capacity of approximately 70 million pounds and a retail/food service nut packing company located in El Paso, Texas.
The Board of Directors also approved the acquisition of 100% of the outstanding stock of Franklin Inmobiliarios, which owns the about 175,000ft² candy manufacturing building in Juarez, Mexico. The acquisitions are expected to close in April, 2002.
The acquisition of both Franklin and Inmobiliarios will be accomplished by the immediate issuance of approximately 1,846,000 shares of restricted Elamex stock and approximately US$1.15m in cash. This transaction will result in total outstanding Elamex shares of approximately 8,712,000 of which 55.6% will be owned by Accel or its related affiliates. The issuance of the Elamex shares is subject to authorization by the Elamex shareholders at a special shareholders’ meeting planned for 19 April 2002, which meeting will be held in conjunction with Elamex’s annual shareholders’ meeting scheduled for the same day. Proxy material will be sent to Elamex shareholders prior to the special meeting.
Franklin is currently owned 32.9% by Accel, which currently owns 59% of Elamex. Inmobiliarios is currently owned 50% by a company in which the Chairman of the Board of Elamex is a principal. All of the cash paid will be used to acquire the ownership interests of Franklin. The cash portion of this transaction will be paid only to non-related third parties, not to Accel or any party related to the Chairman of the Board of Elamex.
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By GlobalDataSimultaneous with the acquisition of these two companies, the Board of Directors has also approved the infusion of US$7.5m of new equity into Franklin to repay short term loans previously made to Franklin by Elamex and to provide additional general working capital for the Franklin business.
Richard P. Spencer, president and CEO of Elamex, said: “The acquisition of Franklin represents a significant step in the implementation of Elamex’s long term strategy of ownership in companies which manufacture in Mexico, but whose markets are in the United States. Franklin has new, world-class manufacturing and packaging facilities both in Juarez, Mexico and El Paso. We believe Franklin is uniquely positioned to take advantage of the trend to manufacture hard and soft candies in Mexico for the US market.
“We believe Franklin has the potential to soon become the largest and most profitable business segment in the Elamex group. Although it is anticipated the transaction initially will have dilution to existing shareholders’ tangible book value per share, we are confident that the medium and long term impact on Elamex’s earnings per share will be significantly improved.”
