Assa Abloy to Buy Ameristar, which claims to be the largest ornamental-fence manufacturer in the world

October 2, 2013 Leave a comment

Updated October 1, 2013, 5:12 p.m. ET

Swedish Lock Company to Buy U.S. Fence Maker

Assa Abloy Makes Further Bet on American Market with Deal to Buy Ameristar

GUSTAV SANDSTROM

STOCKHOLM—Assa Abloy AB, ASSA-B.SK +1.56% the Swedish company that is the world’s biggest lock maker by sales, is furthering its bet on growing U.S. demand for high-end security products, agreeing to buy Tulsa-based fence maker Ameristar Fence Products Inc. Specific terms of the deal weren’t disclosed. The transaction follows several other Nordic companies’ spending money on American assets with sales dependent on the strength of U.S. manufacturing and construction.Ameristar, which claims to be the largest ornamental-fence manufacturer in the world, makes steel and aluminum enclosures commonly put around the perimeters of swimming pools, stadiums, military complexes or storage facilities. Ameristar’s sales are expected to reach $173 million this year.

The U.S. company’s sales would represent just a sliver of Assa Abloy’s revenue base of 47 billion Swedish kronor ($7.5 billion). Yet the deal still represents a broader step toward sharpening Assa Abloy’s focus on the U.S. market, which now represents more than one-third of the company’s sales.

“We are the U.S. market leader in our business areas, so this deal is a logical continuation,” Assa Abloy Chief Executive Johan Molin said in an interview Tuesday. “This is a new area for us, and we see it as an interesting business that we can develop further.”

Mr. Molin is following in the footsteps of many of his Nordic peers at companies that have cash to deploy or ample access to financing. The European economy has long been the lifeblood of companies in Sweden and neighboring states, but those companies increasingly are shifting their focus to the U.S. and Asia as the euro zone continues to struggle.

Swedish ball-bearing maker SKF AB SKF-B.SK +0.84% in September agreed to pay $1.25 billion for Kaydon Corp., a manufacturer of bearings and velocity-control products. Engineering company Atlas Copco AB ATCO-A.SK +1.22% said the previous month that it would buy vacuum-pump maker Edwards Group Ltd. for as much as $1.6 billion.

The U.S. has been a bright spot for Assa Abloy because of improving market conditions. In the second quarter, strength in the Americas offset weakness in Europe, leading to a 2% sales increase.

Mr. Molin said he expects Ameristar’s operations to fit snugly into Assa Abloy’s existing business because the Swedish lock maker already sells various types of door openings, and the same customers are likely to look to buy fences as well. An Ameristar fence is meant to be more robust than the standard and designed to withstand impact as severe as a car crashing into it.

He added that buyers typically include businesses and authorities with high-security needs, such as nuclear-power plants and embassies.

Filed under Investing Process, Macro Trends

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