Husky announces possible sale, cuts 85 Canadian jobs (March 08, 2007)
Bolton, Ont.-based injection molding equipment manufacturer Husky Injection Molding Systems Ltd. has initiated a re...
Bolton, Ont.-based injection molding equipment manufacturer Husky Injection Molding Systems Ltd. has initiated a review that could lead to the sale of part or all of the company’s shares.
The company announced today that it would consider the possibility of a sale of the company’s shares or a strategic combination with another business.
The move to review the company’s options is based on founder and major shareholder Robert Schad’s decision to consider a sale of his holdings.
“Over the past decade, we have made substantial investments to develop our leading technology platform, expand our markets and distribution network, improve our operations, and build a strong management team,” said Schad in a written statement. “While Husky’s competitive position has become stronger as a result, we do not believe that this position is reflected in our current market valuation.”
The company has appointed Citigroup Global Markets as the financial advisor, but there is no assurance that the review will result in a strategic or financial transaction.
The news of a possible sale overshadowed the weak second quarter numbers and a Canadian workforce reduction, which were also announced today.
Net earnings for the second quarter that ended on January 31 were U.S. $10.5 million, compared to U.S.$12 million in the same period last year. Husky also announced that it had reduced its workforce on its Bolton campus by 85 people.
“Becoming a leaner organization is a critical part of our goal of achieving profitable growth,” noted Husky’s president and CEO John Galt. “While we have made progress, many areas of inefficiency remain and we are competing with companies around the world who are learning and getting better as well.”
Galt also cited the inefficiencies associated with manufacturing goods in Canada that are destined for distant markets. He said that the company had addressed issues such as a high Canadian dollar and ineffective research and development tax structures with the government, but there has been no action.
“While we remain committed to making our Canadian operations successful, it is clear that we will require further improvement and greater efficiency going forward,” he said.
Meanwhile, the news of a review helped Husky hit a record high on the stock market. The company closed at $5.90 on the TSX yesterday, and had a 52-week range of $3.76 to $6.90. At press time, the stock had peaked at $8.05, and was sitting at $7.53 — up 27.63 per cent from the previous day’s closing amount.
Schad founded Husky in 1953, and the company has since expanded to manufacturing facilities in Canada, the U.S., Luxembourg and China. The Canadian company manufactures injection molding machines from 130 to 6,000 tons, hot runner systems, robots and PET bottle preform molds.