Unit sale for Crane falls through
STAMFORD — The proposed sale of industrial-products manufacturer Crane Co.’s engineered materials business has been abandoned in the wake of Department of Justice litigation to stop the deal.
The Justice Department filed suit in March to block Stamfordbased Crane’s planned $360 million sale of the business to Monterrey, Mexico-based Grupo Verzatec. Justice Department officials were particularly concerned about the transaction’s potential impact on competition pertaining to the sale and production of pebbled fiberglass reinforced plastic (FRP) wall panels, which are used in many hospitals, restaurants, grocery stores and convenience stores across the U.S.
A trial was scheduled for Oct. 4. But as a result of Verzatec and Crane’s decision to terminate the deal, a joint stipulation of dismissal has been filed, according to Justice Department officials.
“Verzatec’s proposed acquisition of (the engineered materials business of ) Crane was a brazen attempt to eliminate its main rival and establish a monopoly in this market,” Assistant Attorney General Jonathan Kanter, of the Justice Department’s Antitrust Division, said in a statement last week. “This case further demonstrates the Justice Department’s resolve to file and litigate suits to block unlawful and anticompetitive mergers under both the Clayton Act and as illegal monopolization under the Sherman Act.”
Justice Department officials added in a news release that as a result of the sale being abandoned, building-supply distributors and home-improvement retailers across the country “will continue to benefit from the head-to-head competition between the companies, as will the many American businesses that use pebbled FRP in applications where low cost, durability and sanitary performance are paramount.”
The Justice Department “rejected the initial set of remedies proposed,” and Verzatec terminated the sale agreement on May 26, according to a Crane news release. Verzatec will pay a $7.5 million termination fee to Crane.
“Following continued objections from the Department of Justice over a minor overlap in a small segment of the engineered materials business, our agreement to sell that business has been terminated,” Crane CEO and President Max Mitchell said in a statement. “As always, we will
continue to assess our portfolio composition and structure, and we will continue to explore alternatives for the outstanding engineered materials business in due course.”
The demise of the deal with Verzatec will not derail Crane’s plan to split into two independent, publicly traded companies. When it announced in March that course of action, the company said it aimed to complete the split within approximately the next year.
Mitchell said in his new statement that, “our planned separation into two independent, public companies is proceeding according to our original schedule.”
Ranking No. 767 on this year’s Fortune list of the highest-revenue companies, Crane will maintain a significant presence in Stamford after the split, according to company officials.
Among other key developments, Crane confirmed this week the completion of the approximately $300 million sale of Crane Supply, its Canadian distribution business.