Ferro expands electronics product portfolio with acquisition of ESL


Functional coatings and colour solutions company Ferro Corporation has made its fifth acquisition this year – it has acquired Electro-Science Laboratories, Inc. (ESL), an electronic packaging materials company. Ferro paid US$75 million excluding customary adjustments and fees for the privately held company headquartered in King of Prussia, Pennsylvania.

Full-year 2016 adjusted EBITDA is expected to be US$9.2 million, suggesting a transaction multiple, excluding synergies, of 8.2x. Ferro expects synergies in excess of US$10 million, with US$6 million realised within the first three years of operation. The company expects the transaction to be accretive to earnings in year one

The acquisition of ESL enhances Ferro’s position in the electronic packaging materials space with complementary products, and offers an attractive platform for growth in Ferro’s Performance Colours and Glass business unit.

ESL produces thick-film pastes and ceramic tape systems that enable important functionality in a wide variety of industrial and consumer applications, such as thick-film paste conductors, dielectrics and resistors (also known as thick-film inks, paints or coatings), ceramic tape systems, and fired parts such as porous alumina and zirconia cover plates, solid oxide fuel cell substrates, multi-electrode arrays, and both anode-supported and electrolyte-supported fuel cells.. These advanced materials find application in hybrid microcircuits and multilayer microelectronics, electronic components such as inductors, capacitors and transformers, heaters on steel or other substrates, plus low and high temperature co-fired ceramics (LTCC and HTCC).

Hybrid integrated circuits using ESL products are used in aerospace and defense applications, such as satellites. The modules and sensors are used in automobile components, including oxygen sensors. ESL products in heat sensors are used in appliances such as ovens and water heaters. ESL paste systems for heaters are used on a wide variety of substrates, including metal, ceramic and glass. ESL was founded in 1962 and has remained privately owned and associated with the founding family. The business has operations in the US and UK and has 86 employees.

Peter Thomas, Chairman, President and CEO of Ferro Corporation, said, “This acquisition gives Ferro a more significant share of the addressable market for electronic packaging materials, and is highly synergistic within our current Ferro business. While ESL and Ferro both employ similar manufacturing processes, the product portfolios, end use applications and customers are complementary. In addition, Ferro is backward integrated into glass production, which will provide raw material synergy opportunities. ESL is aligned with our asset-light and heavy-touch operating philosophy and our commitment to adding value for our niche market customers across the globe. ESL is a recognised leader in a market that is expected to continue to grow as a result of increasing everyday use of electronics and sensors within our homes, vehicles and offices.”

“The ESL transaction is the fifth acquisition this year and is the first significant acquisition in our Performance Colour and Glass segment, and we are actively reviewing other opportunities in this space,” continued Thomas. “We are making acquisitions across all of our businesses to enhance our capabilities, expand our product portfolio and drive new opportunities for growth.”


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