Falcon Buying Czech Firm Deal in Works for 3 Years
Adam Goodman Of the Post-Dispatch, St Louis Post-Dispatch (MO)
Falcon Products Inc. of Olivette is on the verge of buying a government-owned furniture maker in the Czech Republic after more than three years of negotiations.
Falcon, which makes furniture primarily for restaurant chains, hotels and offices, has agreed to pay $1.9 million for a majority stake in Miton a.s. in Mimone, a Czech town about 60 miles northeast of Prague near the German border.
The Czech Republic, like other Eastern European nations previously under Communist rule for decades, is seeking to privatize government-owned industries.
The 300 workers at Miton's giant 700,000-square-foot factory - complete with two dormitories - make wood furniture. They specialize in bending wood - a process in which steam is injected into the wood, which is then curved into shape and held in place with clamps until it forms a chair frame, leg or rail.
Miton reported a profit of $119,000 on sales of about $3.3 million last year, Falcon said. The company, which sells to customers all over Europe, has sold wood chair frames to Falcon for 22 years.
"It's a great opportunity," said Franklin A. Jacobs, Falcon's chairman and chief executive. "These people have been making wood furniture since the 1850s."
Falcon has agreed to a three-part deal:
- First, by Sept. 15 the company expects to pay $970,000 to the Czech government for a 51 percent stake in Miton.
- About two weeks later, Falcon will pump additional capital of $890,000 into Miton in exchange for newly issued Miton stock that will raise Falcon's ownership to 67 percent. The government then will sell the rest of Miton to Czech citizens through government vouchers.
- Over the next five years, Falcon is promising to invest $2.5 million more to buy new equipment for Miton. …