Sonnax a 'new company, same thing'
BELLOWS FALLS — Sonnax Industries, an auto parts company, has sold its assets to Marmon Holdings Inc., a subsidiary of Berkshire Hathaway.
The result is a new company called Sonnax Transmissions that will operate in Bellows Falls. Employees from Sonnax Industries will remain on with the new company. Tommy Harmon, Sonnax Industries CEO, will work with Marmon to help with the transition.
"New company, same thing," said Tris Coffin, an attorney who represents Sonnax Industries.
The company was sold, Coffin said, because a settlement was reached in a lawsuit that the U.S. Department of Labor had filed against Sonnax Industries. The company was sold to employees in 2010 for $48 million. In December 2016, the Department of Labor filed a lawsuit against Sonnax claiming that the company's process of selling shares to employees was "fundamentally flawed" and led to "sizable financial losses."
Coffin said the Department of Labor felt the price was too high, but the previous owners of Sonnax, Harmon and Frederick Fitz, thought the price was fair. When the company's assets were sold to Marmon, Coffin said, the price was well over $65 million. Each employee was paid three times the amount of their proportional shares.
Coffin said Marmon was interested in the company because of its success. "Sonnax had been doing incredibly well," he said. "Employees weren't looking to sell it."
From 2010 to 2017, the company went from having an estimated $44 million in sales to $65 million, Coffin said.
In an email to the Reformer, Steve Boyer, the new Sonnax Transmissions president wrote, "The Sonnax brand is highly regarded within the automotive aftermarket industry." A press release announcing the sale touted Marmon and Berkshire Hathaway's stability.
"The bottom line is that this is a fantastic thing for the company, the employees, the whole area," Coffin said.
To sell their assets, employees had to vote; 98.6 percent of employees were in favor of the sale, Coffin said. The new company has also signed a "long-term lease," Coffin said, meaning it will be staying in Vermont.
Marmon refused to purchase the company until the lawsuit was settled. An official settlement hasn't been filed yet, but Coffin says it's in the works. Marmon stipulated that the settlement must be reached within 30 days of the purchase, he said.
Meanwhile, Boyer wrote, "we are excited about Sonnax's future as part of Marmon ... and we look forward to growing the business in the years to come."
Harmony Birch can be reached at email@example.com, at @Birchharmony on Twitter and 802-254-2311, Ext. 153.
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