Myers Industries Inc. will sell off its restructured Lawn and Garden segment, which accounts for about a quarter of the company’s revenue, and is buying plastic fuel tank maker Scepter Corp. for $165 million.
The sale of the Lawn and Garden segment might take up to 12 months, the Akron company said Monday. Myers has hired investment bank William Blair & Co. to find buyers.
The Lawn and Garden segment has about 900 employees and made up $205 million of Myers’ $820 million in revenue last year. The division makes plastic flower pots, nursery containers, planters, hanging baskets and other items for professional greenhouses as well as for consumer retail. Brands include Dillen, Listo, ITML and Planters’ Pride.
There will be some effect on Myers’ Akron-area operations, a company spokeswoman said. The Lawn and Garden segment has offices in Twinsburg and a manufacturing plant in Middlefield.
Lawn and Garden had been struggling in recent years but recently began making some money again for Myers while showing a loss of $1.5 million before taxes for all of 2013. Adjusted income last year was $11.8 million. The company started a second round of restructuring and said its options included putting the segment up for sale.
“After detailed evaluation, the company and the board of directors have determined that the Lawn and Garden Segment has the greatest opportunity as part of an organization that is strategically focused on its primary markets for future growth,” John Orr, president and chief executive officer, said in a statement.
Shares of Myers Industries rose 3 cents Monday to $21.28. They are up 1.4 percent, including dividends, since Jan. 1 and 47.8 percent from a year ago.
The Lawn and Garden segment will be reported as discontinued operations in future Myers financial filings.
“I think it’s a good strategic move for them,” said Gary A. Farber, an industry analyst who follows Myers Industries for CL King and Associates in New York City. “The Lawn and Garden business was basically not earning back its cost of capital.”
Farber thinks that Myers probably will seek more than $100 million for its Lawn and Garden segment.
He also said it makes sense for Myers to put more emphasis on its Material Handling segment, which he described as a more attractive market long term. It makes large containers, pallets, storage bins and other items under brand names that include Akro-Mils, Jamco and Buckhorn. It accounted for $323 million, or 39 percent, of company revenue last year.
Myers Industries makes and sells other plastic and rubber products and is also a specialty tool distributor.
The company said it expects to close on its purchase of Canada-based Scepter Corp. and Scepter Manufacturing LLC in 30 days. The company, headquartered in Scarborough, Ontario, uses injection- and blow-molding technology to make plastic fuel cans, ammunition containers, water containers and other items.
Scepter also has facilities in Oklahoma.
Last year, Scepter totaled about $100 million in annual sales in marine, industrial, military and consumer markets. It will become part of the Material Handling segment at Myers and is expected to increase segment sales about 30 percent.
Myers is using a $300 million revolving credit facility to buy Scepter. The company said it expects to use proceeds from the Lawn and Garden segment sale to pay down debt.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.