Ferro rethinks a sale of its business

Having brushed off US compounder A. Schulman’s offer to buy it for US$563 million in 2013, US-based functional coatings and colour solutions company Ferro Corp. now says it is exploring possible strategic alternatives for the company to enhance shareholder value. The company stated that “no decision has been made to engage in a transaction or transactions resulting from the Board’s exploration of strategic alternatives, and there can be no assurance that any transaction will occur or, if undertaken, the terms or timing thereof”. It has retained Lazard Frères & Co. as its financial advisor.

According to a Reuters report, in March, Ferro shareholder FrontFour Capital Group, a Connecticut-based hedge fund that has been a shareholder since 2012, called on the company to explore a sale, arguing that potential buyers would be interested in Ferro's "significant operational improvement, strong market share positions, robust free cash flow generation and deep acquisition pipeline."

FrontFour has also said it was concerned that “Ferro's board may not be engaging with potential buyers and was refusing to provide transparency to shareholders regarding the strategic path of the company.”

Ferro supplies technology-based performance materials, including glass-based coatings, pigments and colours, and polishing materials to the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Headquartered in Mayfield Heights, Ohio, the company has approximately 4,860 employees globally and reported 2015 sales of US$1.1 billion.

Its first-quarter net sales increased to US$277 million from US$263 million in the last quarter.