Mueller Industries Buys HeatLink, PexCor

Copper piping and tubing specialist Mueller Industries Inc. has moved into plastics with its purchase of two affiliated businesses — PexCor Manufacturing Co., a cross-linked polyethylene pipe maker; and HeatLink Group Inc., a PEX pipe supplier — in a deal that keeps the acquired businesses' ownership team in place and sets new goals of growing product lines for all the entities.

Co-owned by Manfred and Garry Schmidt until the deal closed May 31, the brothers continue to lead the Calgary, Alberta-based operations of HeatLink and PexCor for the 100-year-old Mueller Industries, which has its headquarters in Memphis, Tenn., and sites across the U.S., Canada, the United Kingdom, Mexico, South Korea and China.

Mueller specializes in copper and copper alloy manufacturing but also produces goods such as tubing, fittings, valves and vessels from aluminum, steel and plastics for plumbing, heating and cooling systems. In addition, Mueller makes rod, forgings, extrusions and components for OEM applications. The products are sold to the building, appliance, defense, energy and automotive markets.

PexCor and HeatLink, which produce and sell products for residential and commercial cross-linked polyethylene plumbing and radiant heating and cooling systems, will complement Mueller's piping systems group and support its plans to increase its flow-control product offering for pressure plastics, according to a June 6 news releases announcing the transaction.

Last year, Mueller's piping segment wrote-off a $6.1 million research and development project related to PEX, CEO Gregory Christopher said in a letter to stockholders, customers and employees that preluded the 2016 annual report.

"We began this initiative in 2014, aspiring to develop a strategically superior process for manufacturing PEX plastic piping applications," Christopher wrote. "After evaluating progress to date, we concluded that this particular growth process was too experimental, too time-consuming, and required too great an investment to continue. We are now in the process of regrouping, with hopes of charting a more promising — and more proven — path forward."

And, that's how the two acquired businesses fit into plans for Mueller, which posted sales of $2.1 billion in 2016, a number that was flat compared to 2015.

"HeatLink and PexCor are the path forward now," Randall Quon, communications coordinator for the affiliates, said in a June 6 email.

In April 2016, the two businesses had entered into an intellectual property licensing agreement with Uponor AB that resolved a five-year legal dispute about a patent related to the PEX pipe manufacturing process and an apparatus to make products from cross-linkable polymers at high speeds using infrared radiation. Now they are poised to grow with Mueller, according to Manfred Schmidt, the president of HeatLink Group.

"This is a unique opportunity to partner with an organization that has a similar family-based history, and a record of successfully integrating acquisitions in a manner that leverages the capabilities of both parties over a long period of time," he said in a news release. "We can now accelerate our plan to introduce new HeatLink products, expand our proprietary PEX-a production, and access a range of new markets with quality solutions incorporating both HeatLink and Mueller products."

PEX-a is PEX that uses the "Engel/peroxide method," Quon said.