Piovan to acquire IPEG for US$125 mn

Italian auxiliary equipment maker Piovan SpA is acquiring US-based industrial group IPEG Inc. With the acquisition, Piovan said it will be creating a “global leader, with a turnover of almost EUR500 million, in the field of industrial automation for the processing of virgin and recycled polymers and bioresins”. Closing is expected within the first quarter of 2022.

Piovan said it is acquiring 100% of the outstanding shares of IPEG from Sewickley Capital Inc. IPEG is a family of businesses serving the global plastics-processing, waste recycling, and industrial heat-transfer markets and has four auxiliary brands under its portfolio: Conair, Thermal Care, Pelletron and Republic Machine. The deal, which is expected to close in late January, calls for an initial payment of about US$125 million and up to another US$22 million to be paid as a potential earn-out in 2024 if EBITDA targets are met.

The combined group will have a workforce of more than 1,800 employees and will operate 14 facilities worldwide, and would have generated pro-forma sales of over EUR450 million (on the basis of the results for the 12 ended 30 September 2021).

Based on the results for the 12 months ended 30 September 2021, IPEG reported revenue of over US$191 million and adjusted EBITDA of approximately US$17.44 million. Headquartered in Cranberry Township, PA, IPEG employs more than 700 people worldwide and has two manufacturing plants in Illinois and Michigan, two offices in Georgia and Kentucky, and a production plant in India.

"The acquisition of such an important American player and the merger of two of the largest companies in the world in the field of industrial automation for the processing of virgin and recycled polymers and bioresins will allow us to achieve important growth opportunities on a global scale,” stated Filippo Zuppichin, CEO Piovan Group.

He added that it will allow Piovan Group to access a formidable customer base in North America, with the possibility - thanks to the international set up of Piovan Group - to follow the investments of the main American multinational corporations in the world. “Moreover, it will allow a faster rollout to the American market of the Group's proprietary technologies particularly in the circular economy. We are convinced that this transaction will create great value for our shareholders.”

Chairman Nicola Piovan said, “Two years ahead of schedule, we have doubled our size since the year of the IPO (in 2018) and we are confidently prepared to meet future challenges.”

The deal will enhance Piovan's automation products for material handling, downstream equipment, shredders and chillers, as well as strengthen its position in the medical market and allow it to expand geographically in the US, Mexico and India, where IPEG has a strong presence.

The statement also said that the acquisition of production capacity in India and the possibility to produce chillers in the US will also allow Piovan to accelerate its industrial plans.

According to IPEG CEO, Kirk Winstead, "We have known and respected the Piovan Group for decades and are excited to join forces to better serve our collective customers and employees into the future. As we considered the future of the IPEG businesses, there were many compelling reasons to go forward with a 'stronger together' ownership structure. The strengths of the Piovan Group and IPEG are highly complementary and uniquely position the new group to leverage those strengths on a global basis. I am further convinced that this will bring value to all our stakeholders."

The transaction will be financed through a mix of a new debt line amounting to EUR100 million (for which Piovan has already received a commitment from Banco BPM S.p.A.) and a portion of available cash. The pro-forma post-acquisition leverage will be approximately 2.0x3.

The closing of the transaction is subject to the approval of US antitrust authorities, which is expected around January 2022.

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