In The News: March 2004

Pentair To Buy Sta-Rite

Early in February, Pentair Inc., Golden Valley, Minn., entered into an agreement to acquire WICOR Industries, a unit of Wisconsin Energy Corporation, Milwaukee. WICOR, which manufactures water system, filtration and pool equipment products under the Sta-Rite, SHURflo and Hypro brands, is expected to generate sales of approximately $750 million in 2003 and employs 3,500 people in 24 locations worldwide.

The $850 million cash transaction, which Pentair plans to complete in the second or third quarter of 2004, is subject to satisfaction of customary conditions and applicable regulatory approvals.

Following the sale, Pentair plans to move its Water and Wastewater Systems division to Delavan, Wis., according to Rick White, a spokesman for WICOR.

In terms of any changes that could take place, Mark Cain, a spokesman for Pentair, said: "With any acquisition there is a detailed integration process that has to be accomplished, and to do that we have formed 14 various integration teams, comprising some 90 employees. Their functions will be to examine aspects of both the WICOR and Pentair businesses to see where and what might be done to make the businesses more efficient to increase sales and to reduce costs.

"Those teams will not really have an opportunity to dive into the task that faces them until after the transaction is complete, which we expect in second or third quarters of this year. Once they do, they will develop a battery of recommendations and then decisions will be made based on those recommendations."

Cain also had some reassuring comments regarding Sta-Rite. "Our purpose is to grow this business, not shrink it. And to grow it you need people, places and talent. I don't think anybody should be particularly nervous or concerned."

Cain continued, "If you've got an excellent brand name like Sta-Rite in the pool and spa industry, would you get rid of it? We wouldn't.

"Sta-Rite is a strong brand name, it's a valued brand name, and it's a valued brand name to Pentair — otherwise we wouldn't have bought it. We're not going to spend good money for a brand and then ignore it. It's very likely that both the Pentair Pool Products brand, which is ours, and the Sta-Rite brand will be elevated, accelerated and further energized by the combination of the two businesses under the Pentair roof."

Richard J. Cathcart, president and CEO of Pentair's Water Technologies Group, also expects the acquisition will only help the businesses grow, "Pentair has made 11 acquisitions in the Water Technologies arena since 1995 and each has increased sales, captured synergies and contributed to Pentair's earnings within the first 12 months of ownership. We expect to generate similar results with the integration of WICOR. We expect to save more than $30 million in the first full year of ownership, primarily through sourcing, supply chain and manufacturing synergies.

"Growing the sales of our Water Technologies business will be a top priority. Accomplishing that goal is a task made easier by the fact that both Pentair and WICOR possess strong management teams, have experience in the water industry and have recognized products. There are also strong parallels in our company cultures, both of which are built on core values of integrity and respect."

"The WICOR acquisition will transform Pentair into a diversified company defined largely by a $2 billion Water Technologies business," said Pentair Chairman and CEO Randall J. Hogan.

Scherer Elected Chairman Of NSPI

Stephen Scherer has recently been elected 48th chairman of the National Spa & Pool Institute.

He is also currently the executive vice president and CEO of Balboa Instruments, Tustin, Calif., where he has been employed for 10 years.

Scherer is an eight-year member of NSPI's Manufacturers Council and has served as secretary, vice chairman and chairman. He was also chairman of the Industry Leadership Conference for two years and a member of the Planning Committee for the Conference for three years.

As chairman of NSPI, Scherer says he plans to continue working on the objectives the Board of Directors has been working on for several years. Those include transitioning smoothly to a new association that will incorporate a modified organizational structure that enhances the value of membership to current members.

Other objectives are "to complete the development of a detailed longterm strategic business plan for the association and to improve not only the types of products and services offered by our association, but also the communication and delivery of these products and services to our members.

"I believe that it is going to take consistent, strong leadership to successfully guide our industry in addressing critical issues affecting it, and I am honored to be a part of that leadership team," says Scherer.

Hot Tub Sales Grow Despite Economy

The North American hot tub industry saw modest growth in 2003, with 387,000 hot tubs sold by U.S. and Canadian manufacturers, a study by NSPI's Hot Tub Council says.

This is slightly ahead of 2002, in which NPSI estimates 375,000 units were sold.

Several hot tub manufacturers surveyed also expressed optimism for this year. Jerry Greer, formerly of Sundance Spas, Chino, Calif., says he is expecting "another year of double-digit growth," and Dominick Austin of Miami-based Vita International says he is expecting growth of 12 to 15 percent through new product opportunities, market penetration and expansion in the European market.

Overall, NSPI projects growth of 8 to 10 percent in hot tub sales for 2004.

This market study was based on collective market research by the following Hot Tub Council members: Aqua-Flo, Chino, Calif.; Aristech Acrylics, Florence, Ky.; Balboa Instruments, Tustin, Calif.; and TruHeat, Allegan, Mich. Additional data and analysis was provided by Watkins Mfg./HotSpring Spas, Vista, Calif.; Lucite International, Cordova, Tenn.; Master Spas, Fort Wayne, Ind.; and Sundance Spas.

GE Commercial Acquires Transamerica 

Danbury, Conn.-based GE Commercial Finance recently announced it acquired Transamerica Distribution Finance, which will become part of its GE Vendor Financial Services business unit.

"Combining the spa industry's two most prominent financial service providers into a single financing source establishes a business with additional scale and the capital resources needed to develop innovative products and services that meet the changing needs of customers," says Bob Martin, president and CEO of GE Commercial Distribution Finance.

GE Vendor Financial Services, a unit of GE Commercial Finance, is a leader in developing and providing financial solutions and services to equipment manufacturers, distributors, dealers and their end users. The $26 billion company offers its services to 1,200 manufacturers, 49,000 dealers and distributors and over 60,000 accounts in more than 30 countries.

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