Mountain Grove company makes national moves

A Mountain Grove manufacturer of high-density polyethylene pipe has expanded its production capabilities through a whirlwind acquisition of four plants, including three on the East Coast.

Bore Flex Industries Inc. acquired three plants and a distribution center from Lamson & Sessions Co., a subsidiary of Memphis, Tenn.-based Thomas & Betts Corp., which manufactures electrical components for customers in the construction, industrial and utility sectors. Bore Flex President Mike Morgan declined to disclose details of the transaction, which closed Dec. 31, but did say his private company used "creative financing."

Bore Flex, which had annual revenues of about $30 million last year, acquired pipe-manufacturing plants in Dunn, a town east of Mountain Grove, Erie, Pa., and Tennille, Ga., as well as a distribution center in Fort Myers, Fla., Morgan said. Also part of the deal was Cranesville, Pa.-based H&H Aero, which manufactures precision metal components for the aerospace and tooling industries.

Bore Flex, which is co-owned by partners Morgan, Carl Jungers Sr., Todd Volker and a silent investor, learned of the expansion opportunity in late November and quickly launched into negotiations with Lamson & Sessions officials, Morgan said. With the assistance of attorneys at Springfield law firm Cantwell, Evans, Carnahan & Brown PC working through the holidays, he said, the deal closed in just five weeks.

"I think we may have broke some records in some of the due diligence processes," Morgan joked.

As Bore Flex absorbs the existing plants and their more than 200 employees, company officials are working to minimize disruptions for their customers, who cover the telecommunications, municipal, industrial and energy markets.

"It's going to be quite good for (our customers), but it's still kind of new," Morgan said, adding that Bore Flex is doing its best to make its pipe distributors aware of the change.

Morgan's career in the pipe-manufacturing industry dates back more than a decade to a pair of Florida companies.

In the early 1990s, he and Jungers were among a group of partners who started Gulf Island Pipe - a distributor of steel pipe products for underground utilities - in Fort Myers, Fla. The business later expanded into polyethylene pipe manufacturing under the Ameriduct Worldwide Inc. banner and built plants in Mountain Grove and Tennille, Ga., Morgan said.

In late 2000, Ameriduct's shareholders sold the company to Ohio-based Lamson & Sessions, which paid $54 million in cash and assumed $11 million in debt, according to Securities and Exchange Commission filings.

Publicly traded Thomas & Betts (NYSE: TNB) later acquired Lamson & Sessions in November 2007 for $450 million. Following a brief strategic evaluation, Thomas & Betts announced in January 2008 that it would divest the polyethylene pipe division of Lamson & Sessions, said Tricia Bergeron, vice president of investor and corporate relations for Thomas & Betts.

"We still retained the shelf-goods business of L&S, primarily their Carlon brand of nonmetallic boxes and fittings - that's what we bought it for," she said. "Thomas & Betts primarily sells electrical shelf goods. ... Pipe products do not fit into that model."

Bergeron would not comment on negotiations with Bore Flex, a company she said was one of several interested buyers.

Morgan jumped at the opportunity to triple Bore Flex's annual production capacity to about 100 million pounds of pipe, and he was excited to re-establish ties with a company he helped build from the ground up.

"We actually built those plants in the first place," Morgan said. "And many of the personnel that came on board with us were ones that we had put in place (years ago)."

Bore Flex is entering 2009 with high expectations.

"We are somewhat immune to some of the environmental stresses that a lot of other industries and businesses are experiencing right now," Morgan said.

Oil prices, however, remain an area of concern for Bore Flex officials - especially on the heels of a year that saw petroleum costs reach all-time highs before crashing in the last quarter.

"The polyethylene market has been on a roller coaster in the past few years, because the raw materials are a direct derivative of oil," Morgan said. "So it's been a very difficult market to manage in the sales aspect. You're really not sure what you're raw materials are going to cost you from one day to the next."

Bore Flex manufactures its pipe through a "continuous extrusion" process that Morgan describes as "basically a barrel and a screw and heat and a cooling process."

The company works almost exclusively with distributors such as St. Louis-based Pittsburgh Pipe, which sells the pipe directly to contractors in 48 states. In fact, Bore Flex is Pittsburgh Pipe's second-largest vendor of high-density polyethylene pipe conduits, said purchasing agent Jerry Brookshire.

Pittsburgh Pipe and other distributors that purchased separately from Bore Flex and Lamson & Sessions will now deal solely with Bore Flex, and that's fine by Brookshire.

"With the addition of those extra plants, we're looking to increase our presence and, therefore, their presence," Brookshire said. "We consider them one of our strategic partners without a doubt."