French firm to buy Faribault window glass maker

  • Article by: MIKE HUGHLETT , Star Tribune
  • Updated: May 9, 2012 - 9:59 PM

Sage Electrochromics will be a part of Saint-Gobain but keep its brand, its CEO and its city.

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At Sage Electrochromics, Shawna Westphal and Shelly Kubes inspect glass that will be fitted with proprietary technology that can control the amount of glare and heat at a push of a button.

Photo: Richard Tsong-Taatarii, Star Tribune

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French glass and building materials giant Saint-Gobain will take control of Faribault-based Sage Electrochromics, a deal that could accelerate sales of Sage's innovative "smart glass" windows.

Paris-based Saint-Gobain said Wednesday that it will buy the 50 percent of Sage it doesn't already own. The French company bought half of Sage for $80 million in cash in 2010, and the two companies combined their electrochromic glass research, marketing and manufacturing efforts.

Terms of the latest deal weren't disclosed.

Sage, which employs about 125 people, will become a subsidiary of Saint-Gobain but will remain based in Faribault, where it is completing a $150 million factory. Sage founder and Chief Executive John Van Dine will continue to lead the company, and Sage's products will continue to be sold under its SageGlass brand.

"This acquisition is good for Faribault and the state," Van Dine said. "It continues Sage's ability to grow and grow fast."

Sage produces glass with electronically controlled tinting that cuts energy demand for air conditioning and lighting. The company starts with window glass and applies a very thin ceramic coating to it.

After installation, the coating is activated by a stream of low-voltage electricity. The result: a window darkens, without becoming opaque -- sort of like sunglasses with tint-control.

Sage, which began commercial production in 2003, doesn't break out sales and has yet to turn a profit. But some observers think the nascent market for electrochromic glass has a lot of potential, and Sage faces limited competition.

"Green [technology] is very big," said Matt Zielenski, a building materials industry analyst at Freedonia Group in Cleveland.

The problem for electrochromic windows, so far, is cost. "That is a huge issue," Zielenski said. "They are expensive, and there are less costly ways to make windows environmentally friendly."

Installing Sage's windows can be double the cost of regular windows, although that doesn't account for energy-related savings.

The key to bringing down the price is ramping up production and achieving higher sales volume. Sage's new plant and the Saint-Gobain deal are aimed at accelerating that process.

The new facility will increase Sage's production capacity 30-fold and lead the company to hire 160 new workers. The plant is expected to commence shipments in January 2013.

With Saint-Gobain, Sage gains a deep-pocketed corporate parent in a capital-intensive industry. "It's a smart deal" for both parties, Zielenski said.

Publicly traded Saint-Gobain had $7.7 billion in revenue in North America alone last year. The company has a large share of the global flat glass market, and its Norandex subsidiary is a large window and door distributor in the United States.

Van Dine said the deal announced Wednesday is an "organic evolution" of Saint-Gobain's strategy, which began with its 2010 investment. "You knew there was a high probability a full acquisition would eventually come," Van Dine said.

A chemical engineer, Van Dine was lured from New Jersey to Minnesota years ago by the state's extensive window-making industry. His equity stake in Sage, which he declined to disclose, will be sold to Saint-Gobain along with those of the rest of Sage's investors.

Mike Hughlett • 612-673-7003

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