Milacron Inc., which has struggled in the face of the manufacturing slump, has agreed to sell its Valenite metal-cutting tools business to focus on its plastics machinery and cutting fluids businesses.

        The company, which sold its machine tool business in 1999, said Sweden's Sandvik, the leading maker of metal-cutting tools, agreed to pay $175 million for Valenite, based in Madison Heights, Mich.

Brown

        The agreement, coupled with last month's announced sale of its European-based Widia cutting-tool business to Kennametal Inc. for $170 million, effectively removes Milacron from the metal-cutting tools business. With cutting fluids and grinding wheels, that business represented about half of the company's more than $1.2 billion in revenues last year. The Batavia-based plastics technology business generated the remaining $662 million in sales.

        “We are aligning our future with two important long-term trends,” Ronald D. Brown, Milacron's chairman and CEO, said. “The first and most important is the increasing use of plastics as the material of choice for products made around the world. The second is the growing demand for cleaner, healthier and environmentally friendlier industrial fluids.”

        Last year, Valenite had revenues of $200 million and operating earnings of $3 million, excluding restructuring charges, in what Milacron said was a down year.

        Excluding Valenite and the European cutting tool business which had revenues of $230 million, Milacron's fluids, grinding wheel and round-tool businesses, which it will retain, generated sales last year of $170 million.

        Valenite, which Milacron acquired in 1993, employs about 1,300 and has major plants in Michigan, Texas and South Carolina. A spokesman said the sale, expected to be completed in 60 to 90 days, should have little impact on the company's Walnut Hills corporate offices.

        Despite the sale, Milacron said capital spending remains depressed, and it lowered revenue and earnings expectations for the rest of the year.

        Milacron's shares closed down 46 cents, or 4 percent, at $11.29.

        The company, which previously said it expected a recovery in the second half, said it now sees no recovery before year-end.

        Milacron said it expects revenues from its plastics technology business to be about $30 million lower than previously expected, and operating earnings will be down about $15 million.

        Milacron said it plans to use proceeds from the sale of Widia and Valenite to reduce its debt, which was slightly more than $400 million, less cash on hand, at the end of the first quarter.

        A spokesman said the Valenite sale wasn't the result of pressure from Milacron's banks.

        “Our bankers certainly applaud the move because we're using the proceeds to pay down debt,” spokesman Al Beaupre said.

        Mr. Brown said Milacron's planning over the last couple of years identified the plastics market as its greatest potential.

        The proof is that is where it has been making acquisitions, he said.

        “The economy influenced the timing,” he said, “but strategically, it's consistent with where we're headed.”

        The company ranks first in North America and No. 2 worldwide in plastics technology and third world-wide behind Sandvik and Kennametal in metal-cutting tools including carbide inserts, stool tool holders and carbide die and wear parts.

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