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G&L seeks K&T: buy out for strength.

"A definitive agreement." At this writing, those were the words from William J Fife, Jr, chairman and CEO of Giddings & Lewis Inc, Fond du Lac, WI, and Norman J Ryker, vice chairman and CEO of Cross & Trecker Corp, Bloomfield Hills, MI, in describing their proposed merger.

According to an agreement in principle announced by both companies, G&L will acquire Cross & Trecker when approved by common shareholders of both groups.

Mr Fife says the merger is a good opportunity for both parties. "This is an exciting and very logical strategic move for both of us. It overlays our three key strategies of product-line expansion, penetration of worldwide markets, and product-line extension."

Mr Ryker adds, "This arrangement will allow Cross & Trecker to participate more fully in the growing worldwide factory automation market. We can go forward with a strong partner with very healthy, combined operations."

G&L showed strong internal growth in recent years. Since 1987, sales nearly doubled, from $125 million to $243 million in 1990. Operating income rose from $6 million to $24 million during the same period.

Cross & Trecker, with annual sales of $431,000 in the fiscal year ending Sept 30,1990, has shown an operating profit in two of the past three quarters, following several years of losses--including a $940,000 loss in that same fiscal year.

G&L took a long, hard look at Cross & Trecker's people and facilities, and Mr Fife says, We're very confident we can optimize their strengths and ours. For example, Cross & Trecker's small machining centers and transfer lines are logical extensions and expansions of our own; Kearney & Trecker machining centers and Warner & Swasey horizontal lathes have excellent name recognition, and most fit into size categories where G&L has not participated."

Both corporations believe that many US machine-tool builders have lost sight of the fact that most machine tools are consumed in other countries. G&L says that, in 1990, worldwide machine-tool consumption was more than $40 billion, up from $26 billion in 1981. But only 10% of that consumption was in the US, compared to 21% in 1981.

Furthermore, G&L reports that overseas markets are growing much faster than those in the US, and the secret to tapping those customers is to b there! "To benefit fully from the potential market in western and eastern Europe, we must have a strong base of operation on the continent. Cross & Trecker has that base, and the acquisition will give us more opportunity to offer our products and systems overseas," says G&L.
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Title Annotation:Giddings and Lewis Inc., Cross and Trecker Corp.
Publication:Tooling & Production
Date:Aug 1, 1991
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