WARREN, MI– Noble International has completed its acquisition of Clinton Township, Mich.-based Laser Welding International (LWI), a supplier of laser-welded blanks to General Motors.
The acquisition which was first announced late last week, now includes the proposed sale of LWI’s subsidiary, Monroe Engineering Products.
Noble paid $14.7 million for LWI, with an additional $1 million payable if certain new business is awarded to Noble within the next twelve months. The $14.7 million purchase price includes $14 million in cash and the assumption of approximately $0.7 million in subordinated debt. Noble is funding the purchase through an increase in its credit facility of approximately $20 million, made available specifically for the LWI acquisition.
The proceeds from the proposed sale of Monroe will reduce the amount borrowed to purchase LWI by approximately $5.5 million. During 2004, Noble said it also expects that proceeds from an anticipated income tax refund will be available to further reduce debt incurred in the LWI acquisition.
Noble executives said they believe the LWI acquisition will add approximately $35 million in revenue and will be accretive to earnings for 2004. The company said it also believes the acquisition will allow it to eliminate approximately $2 million in capital spending from its 2004 budget. Noble’s management had previously planned to invest in further developing its own curvilinear laser welding technology and equipment, an investment that can now be eliminated or redeployed to fund other growth opportunities. Noble’s previous guidance on its 2004 capital budget was for spending of $4 million to $6 million.
The proposed sale of Monroe is part of the company’s plan to sell non-core assets to fund the growth of its automotive business. Under the terms of the sale agreement, Noble will receive approximately $5.5 million in cash for Monroe. Noble expects to record a pre-tax loss of approximately $1.7 million on the sale. Monroe has remained profitable, but declining revenue and profitability over the past five years led management to conclude that Monroe’s growth prospects were limited and unlikely to improve due to Noble’s commitment of its resources to the more profitable automotive business.
Noble’s CEO Christopher Morin said the company carefully evaluated the performance of Monroe and considered various alternatives before deciding to sell.
“After considering these alternatives and evaluating Monroe’s growth potential versus immediate growth opportunities in our automotive business, we concluded that selling Monroe at this time was best for the company and maximized Monroe’s realizable value,” Morin said. “We believe these actions are in the best interests of our stockholders in both the short and long term.”
To learn more about Noble International, visit: www.nobleintl.com.
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