Behr Process Corp., one of Orange County's largest private companies and a major manufacturer of paints, stains and varnishes, said Wednesday that it has been acquired by Masco Corp., the nation's largest maker of kitchen cabinets and bathroom fixtures.
Officials at both companies declined to say what Michigan-based Masco paid for Behr. The Santa Ana-based paint company was one of five suppliers to retailing giant Home Depot Inc. that Masco acquired Wednesday. Behr, along with West Palm Beach, Fla.-based Mill's Pride LLP, are the two largest companies involved in the deal, with about $1 billion in combined revenue.
Behr, which has more than 1,000 employees, is a 52-year-old family-owned company that has grown dramatically since becoming a supplier for Atlanta-based Home Depot, the nation's largest home improvement retailer, two decades ago.
Behr will keep its name, headquarters, management team and employees, including about 500 in Santa Ana, intact. Masco "will permit us to maintain our own culture and independence," said Ron Lazof, Behr's chief executive. He declined to disclose Behr's annual sales, which have been estimated to be as high as $350 million, or its profits.
"We are thrilled and excited," Lazof said of the sale, which was six months in the making. "We believe this is a wonderful, wonderful opportunity for all of our employees, customers and suppliers, as well as the communities in which we operate."
Masco shelled out $3.5 billion in stock and cash for the five companies and assumed $300 million in debt.
"Behr is one of the best-managed companies and is a leading company in terms of brand awareness with consumers," Masco spokesman Samuel Cypert said. "This is exactly the kind of company that Masco likes to acquire."
Masco is best known for its KraftMaid cabinets, Baldwin hardware and Delta faucets. The company has acquired several smaller manufacturers in recent years, contributing to its steadily improving fortunes. Masco's sales have increased 68% over the past five years, to $4.3 billion in 1998, while its profits have more than doubled, to $476 million last year.
Masco shares rose 75 cents, to $29.06, in New York Stock Exchange trading Wednesday. The company's stock reached a 52-week high Feb. 2, at $32.25 a share.
Industry analysts said Wednesday that the deal is a good one for both companies.
Behr "gives Masco entry into a sizable market that they haven't entered before," said Christopher Winham, an analyst with Schroaders in New York. "The paints and coatings market is about a $16-billion market, and the key with Behr is that they are very tied to Home Depot, by far their largest customer. Home Depot is a company growing 20% to 25% a year, and so Behr has been able to grow along with them. Now Masco is going to be able to tap into that growth."
Timothy L. Jones, an analyst with Ryan, Beck Southeast Research Group in Boca Raton, Fla., said the deal greatly benefits Behr as well.
"Having more liquid value to their holdings is the appeal for Behr," Jones said. "Masco is a tremendously profitable company with tremendous cash flow. It has been a great stock holding over the long term."
Behr was founded in the Pasadena garage of Otho Behr Jr. in 1947. He later teamed up with his father, Otho Behr Sr., and moved the company to Santa Ana in the early 1950s. Behr was one of the first suppliers to Home Depot when that chain opened in 1978 and has grown dramatically since as the booming home resale market created greater demand for paints, lighting, wallpaper and other goods. Behr remained family-owned until the acquisition was finalized this week.
Over the past decade, Behr has been fined at least twice by the South Coast Air Quality Management District for violating the region's air pollution regulations.
In addition to Behr and Mill's Pride, Masco also acquired Arrow Fastener Co., a New Jersey maker of staple and glue guns; Inrecon LLC, a Michigan repair and remodeling concern; and Superia Radiatoren, a Belgium maker of plate radiators.