Marmon Holdings Acquires Sonnax Industries Inc
Sonnax Industries Inc, a producer of gearbox components, was acquired in early April of 2018 by Marmon Holdings, Inc, an affiliated company of Warren Buffett’s enterprise, Berkshire Hathaway. Sonnax was an employee-owned company, whose employee stock ownership plan (ESOP) was taken to court by the US Department of Labor (DOL) for alleged violations in the procedure of share sale.
Established in 1978, Sonnax is a major producer
of specialized products for different types of vehicles (mainly passenger cars
and CVs) as well as for sector of industry which use transmissions. Sonnax
designs, produces, tests, and supplies a wide range of spare parts used for
repair of torque converters, automatic transmissions, and for protection of
drive shafts and associated components from overloads. Sonnax is the leading
supplier of components for the repair of automatic transmissions. The company
exports spare parts to more than 70 countries and constantly expands its
business area all over the world. At the beginning of 2011, Sonnax transformed
into an employee-owned enterprise thanks to establishment of ESOP.
Before the deal, Sonnax had two owners: Tommy Harmon, the company's president and CEO; and Frederick Fritz, a board member. Harmon held 60% of Sonnax, and Fritz owned the remaining portion. Both of them kept their executive positions after the transaction. However, 6 years after the abovementioned deal, the U.S. DOL filed a charge against previous shareholders of Sonnax associated with infringements of the Employee Retirement Income Security Act. According to the prosecutor, First Bankers Trust Services Inc., an enterprise that was employed to work as a fiduciary to recommend the ESOP on the acquisition, offered a strategy which included the overpayment for Sonnax Industries shares. As a result, the company was purchased by its employees for forty-eight million dollars. The DOL’s official accusation says that First Bankers urged the ESOP to pay excessively for Sonnax shares. Moreover, the party of charge insisted that Harmon and Fritz knew that the price was unreasonably high, "or should have been informed about that”. However, Harmon and Frederick Fitz retorted that the price was fair.
In the fall of 2017, Sonnax received a lucrative free offer related to the company’s sale of shares. The litigation settlement of the abovementioned case was required for Marmon Holdings Inc. to acquire Sonnax Industries' assets. The DOL agreed to dismiss the case if Sonnax was sold for at least $65 million. This requirement was met on the March 30, 2018, and shortly thereafter, the new owner (Marmon Holdings) got possession of the company . To date, it is known that the new enterprise is named Sonnax Transmissions. The operating personnel from Sonnax Industries will remain employed in the new company. The company will stay in Vermont. Sonnax has been one of Vermont’s most successful companies with 3 facilities in Bellows Falls. The turnover over the last decade has nearly increased twofold.
Steve Boyer, left, with Sonnax Industries CEO
Tommy Harmon
The deal was welcomingly endorsed by a vote of Sonnax workers. Steve Boyer was elected as the new president of the company. It is planned that, initially, Boyer will cooperate closely with Sonnax Industries CEO Tommy Harmon to guarantee a seamless transition into Marmon. Harmon announced that thanks to the merger into Marmon, Sonnax personnel will get the backing and great prospects of working under of a prosperous global organization while preserving its homegrown, business feel. Marmon Holdings is an umbrella company for 175 stand-alone producing and service-type companies with facilities all over the world.
