Tarpon to buy Midwest Tube Mills

Tarpon to buy Midwest Tube Mills

Steel tubing manufacturer and distributor Tarpon Industries Inc. has announced it has signed an agreement to purchase all assets of steel tubing manufacturer Midwest Tube Mills Inc. for $27.5 million. Tarpon will pay with cash and a $2.5 million subordinate promissory note. The company will also assume certain trade payables from Midwest Tube. “The acquisition of Midwest would be a significant milestone in Tarpon's growth strategy,” said Tarpon chairman and CEO J. Peter Farquhar. “Their product line will be complementary to our Steelbank Tubular mechanical tubing platform and will provide us with further customer diversification on both a geographic and end-user market basis. As a result of the acquisition, we would expect to see improved purchasing efficiencies, reduced freight expense and increased revenues due to additional sales into our complementary market segments.” Mr. Farquhar continued, “Driving top line growth through acquisitions, in addition to our core business development, provides for an accelerated and expanded customer reach, increased depth and breadth of product line, and the ability to deliver high quality products in a low cost, just-in-time manufacturing environment.” The agreement to acquire Midwest is subject to several closing conditions, including the delivery of audited financial statements. Tarpon is still in the process of securing financial backing for the purchase, which is expected to close in the fourth quarter of 2005. Indiana-based Midwest Tube manufactures mechanical steel tubing products used in the industrial, commercial, and residential sectors. It operates six tube mills and sells to customers throughout the US. Midwest’s 2004 revenues are represented to be $25 million. Tarpon Industries manufactures and sells structural mechanical steel tubing and engineered steel storage rack systems through its wholly owned subsidiaries within the US and Canada.