Schulman to buy part of Ferro’s operations for US$91 mn

In a roller coaster turn of events that had seen US compounder A. Schulman making a failed bid for Ferro Corporation last year (, it has now entered into an agreement to purchase a selected majority of the assets of the Specialty Plastics business segment of Ferro for US$91 million in cash. The purchase agreement includes four facilities located in the US as well as operations in Spain. Subject to the satisfaction of customary closing conditions and regulatory approvals, the transaction is anticipated to close during the fourth quarter of A. Schulman's current fiscal year ending August 31, 2014. Excluded from the transaction are Ferro's plastics business and operations in Edison, New Jersey, and Carabobo, Venezuela.

The acquisition is expected to be accretive to adjusted earnings per share and the company anticipates achieving approximately US$5.5 million in synergies within 12 to 18 months following the close of the transaction, driven primarily by sourcing activities and plant efficiency actions. The speciality plastics assets included in the pending transaction achieved sales of US$154 million in 2013, with approximately two-thirds of these revenues generated in the US. As a result, this acquisition is expected to deliver important geographic diversification benefits to A. Schulman.

Ferro’s speciality plastics segment is a global supplier of custom engineered plastic compounds, colourants, and liquid coatings, primarily focused on thermoset plastic technology. The business offers a broad portfolio of proprietary products and recognised brand names serving a wide range of end markets including packaging, transportation, construction, appliances and agriculture.

"Specialty Plastics is a performance-driven, technically demanding business, and this business segment is what initially attracted us to seek to acquire Ferro back in 2013. Strategically combining the two businesses provides the existing customers of the Specialty Plastics segment with an expanded product portfolio, technical solutions and global resources with the full support of the A. Schulman team. We are delighted to have reached an agreement to purchase these assets, and we plan to leverage their capabilities, competitive advantages and footprint to become an integral part of our growth engine," said Joseph M. Gingo, Chairman, President and CEO of A. Schulman.

This will be Schulman’s ninth acquisition over the past four years, in addition to three joint ventures, said Gingo, adding that the firm continues to execute an “aggressive growth strategy driven by organic growth and acquisitions.” Its goal is to gain US$100 million in sales annually through acquisitions.

The Specialty Plastics segment's products include colour additives and concentrates with a focus on high-margin colour, combination and additive masterbatches; filled and reinforced plastics with a strong position in glass-filled polypropylene and custom formulating capabilities; advanced polymer compounds and alloys including melt-processable rubber, moulding and extrusion materials, and custom compounds.


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