Mark IV Industries Inc. is ending its trip down Wall Street. A "good riddance" from Sal H. Alfiero, the company's founder, chairman and CEO, would be in order. The Alfiero-led belt and hose maker has done everything short of threats to get the investment community excited about the company. Nothing worked, and now it's going private, via a buy-out by British investment company BC Partners Ltd.
Mark IV jumped into the rubber industry in 1988 after launching an unsolicited takeover bid for Armtek Corp. When the offer was sweetened to $546 million, Armtek's directors acquiesced, Mark IV got what it wanted (Dayco Products Inc.), and eventually sold the rest (Blackstone Corp. and Copolymer Rubber & Chemical Corp.).
Compared with its peers, Mark IV's operations have done well. But since 1997, the firm's stock has been in a tailspin, despite improved profits and sales.
The company tried to kowtow to Wall Street: It repurchased a third of its 66 million outstanding shares; it divested $726 million worth of non-core operations, and paid down debt with the proceeds; and it tightened its U.S. and European manufacturing and distribution operations.
The result? Mark IV's stock, going at $27.78 a share in October 1997, slumped to $12.26 on Jan. 1, 1999. It averaged just $19.75 last year.
The only thing that succeeded in boosting the price was word the company contracted an investment banker to find ways to do the cold-hearted business of `increasing shareholder value."
Today, Wall Street is bored by automotive companies, and would rather invest in dot-coms that lose millions and may never have a future. Mark IV does have a future, and as a private company, it can make long-term plans without worrying about the fickle and oft-ignorant investment community. Look for other rubber industry companies to follow Mark IV's lead.