M&As: Parker to acquire Lord Corporation for US$3 bn; Sealed Air to clinch APS bagging firm for US$510 mn

US-based motion and control technologies specialist Parker Hannifin Corporation is to acquire adhesives supplier Lord Corporation for approximately US$3.6 billion in cash. The transaction has been approved by the Board of Directors of each company and is subject to customary closing conditions, including receipt of applicable regulatory approvals. Upon closing of the transaction, Lord will be combined with Parker’s Engineered Materials Group.

Lord, headquartered North Carolina, is a privately-held company founded in 1924 offering a broad array of advanced adhesives, coatings and speciality materials as well as vibration and motion control technologies. Lord’s products are used in mission-critical applications in the aerospace, automotive and industrial markets. It has annual sales of approximately US$1.1 billion and employs 3,100 team members across 17 manufacturing and 15 R&D facilities globally.

Lord’s proprietary products, solutions and technologies for mission-critical applications will increase Parker’s overall engineered materials product and solutions offerings as well as strengthen Parker’s offering of complementary products in core aerospace and defence, high-value automotive and industrial markets, said the US firms.

“This strategic transaction will reinforce our stated objective to invest in attractive margin, growth businesses, such as engineered materials, that accelerate us towards top-quartile financial performance,” said Tom Williams, Chairman/CEO of Parker. “Lord will significantly expand our materials science capabilities with complementary products, better positioning us to serve customers in growth industries and capitalise on emerging trends such as electrification and lightweighting.”

Parker expects to realise approximately US$125 million in pre-tax run-rate cost synergies by full-year 2023. The cumulative cost to achieve these synergies is expected to be approximately US$80 million. Synergies are expected to come from implementation of supply chain and lean productivity, with cross-selling opportunities and global market distribution to provide incremental revenue synergies over time.

In other news, US packaging firm Sealed Air Corporation is to acquire Automated Packaging Systems, Inc. (APS), a manufacturer of automated bagging systems, for a purchase price of US$510 million on a cash and debt free basis.

APS provides full flexible packaging systems, and is known for inventing Autobag bagging machines and pre-opened bags on a roll, APS also offers three recycled film solutions under the EarthAware brand.

Founded in 1962 with headquarters in Ohio, APS employs more than 1,200 people, serves customers in over 60 countries and operates seven manufacturing sites in the US and UK. In 2018, APS generated US$290 million in sales, an increase of approximately 10% year-over-year.

Ted Doheny, Sealed Air President/CEO said, “The addition of APS is well aligned with our Reinvent SEE goal of doubling our innovation rate over the next five years. This transaction expands the breadth of our automated solutions and sustainable packaging offerings, giving us access to growth opportunities in the markets we serve.”

APS brings highly complementary and additive capabilities to Sealed Air, including expertise in engineering, automation technology and sustainability, which strengthens the Sealed Air’s protective packaging solutions.

Sealed Air, which makes Bubble Wrap, says it will benefit from cross-selling opportunities enabling additional growth in key markets and cost synergies resulting from supply chain efficiencies. The transaction is expected to be accretive to Adjusted EBITDA in 2019.

Sealed Air intends to use cash on hand and credit facilities to finance the transaction. The transaction is expected to close early in the third quarter of 2019, subject to applicable regulatory reviews and customary closing conditions.

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