Ferro Further Expands Its Colors Solutions Business: Announces Acquisition of Two Businesses
October 17 2016 - 9:20AM
Business Wire
Ferro Corporation (NYSE: FOE):
- Estimated 2016 Sales for the Two
Businesses of Approximately $76 Million
- Cappelle Pigments is a Leader in
High-Performance Specialty Pigments
- Acquisition of Assets of Delta
Performance Products Adds Customized Colorant Blends for Concrete
and Other Hardscapes
- The Transactions Will Enhance Ferro’s
Position as a Leading Color Solutions Provider
- Increase Ferro’s Pigments, Powders and
Oxides (“PPO”) business by approximately 30%, to approximately $315
million
- Complement Ferro’s current inorganic
pigments portfolio
- Facilitate Ferro’s expansion into
high-performance, specialty organic pigment market
Ferro Corporation (NYSE: FOE “Company”) today announced entering
into an agreement to acquire Cappelle Pigments NV (“Cappelle
Pigments”) and the acquisition of certain assets of Delta
Performance Products (“Delta”), for aggregate consideration of
approximately $60 million.
Sales for the two businesses in 2016 are estimated to be
approximately $76 million in the aggregate and adjusted EBITDA in
2016 is expected to be approximately $11 million. Based on
estimated 2016 adjusted EBITDA, excluding expected synergies, the
purchase price of the two businesses represents a combined
transaction multiple of approximately 5.6X.
Cappelle Pigments:
On October 14, 2016, Ferro signed a definitive agreement to
acquire 100% of the stock of Belgium-based Cappelle Pigments for
€50.5 million (approximately $56 million) on a cash-free and
debt-free basis. The transaction is expected to close by year end,
subject to customary closing conditions, including regulatory
review.
Cappelle is a 125-year-old, privately held company that produces
specialty, high-performance inorganic and organic pigments used in
coatings, inks and plastics and sells its products in more than 75
countries. Cappelle specializes in weather-, heat-, and
light-resistant organic pigments. The company is also a market
leader in certain inorganic pigments that complement Ferro’s market
leadership positions in Complex Inorganic Colored Pigments
(“CICPs”) and Ultramarine Blue pigments.
Delta:
On August 1, 2016, Ferro purchased certain assets of Delta
Performance Products. This business produces customized colorant
blends that utilize Ferro’s CICPs for the concrete and outdoor
hardscape markets.
Peter Thomas, Chairman, President and CEO of Ferro Corporation,
said, “These acquisitions are great additions to our growing
Pigments business. Both fit extremely well into the strategy for
our color solutions businesses, and we are excited about the
opportunities these assets present to enhance shareholder value.
Over the next 12 to 24 months, between the two businesses, we
expect to realize commercial and operating synergies of $3 million
to $4 million.
These acquisitions are much like the Nubiola acquisition we made
last year. They both increase the breadth of options we can offer
our customers, increase our technical capabilities and enhance our
market position. The transactions will increase Ferro’s PPO
business by approximately 30% and expand our addressable market for
pigments by a factor or four, to approximately $4 billion. The
addition of Cappelle’s proprietary pigments and capabilities will
advance our expansion into the specialty organic pigment market and
round out our product portfolio. The Delta transaction enhances our
position as a manufacturer of engineered colorants and custom
blends.”
Mr. Thomas concluded, “These businesses demonstrate the value
proposition of our Pigments business. We create value for our
customers by combining and manipulating pigments to produce
specialized color solutions that provide functional attributes for
our customers’ end products, or improve the effectiveness and
efficiency of their supply chain and manufacturing processes.”
Adjusted Earnings Before Interest, Taxes and Depreciation
(“EBITDA”)
Adjusted EBITDA for the transactions excludes the impact of
certain items, primarily associated with purchase accounting
adjustments, transaction-related expenses and acquisition
integration costs, restructuring activities, gains and losses on
asset sales concluded by the companies being acquired, and other
adjustments to harmonize their accounting results to our standard
accounting practices. The impact of adjusting for these items
cannot be determined as one of the transactions has not been
completed and it is not possible at this time to identify the
potential amount or significance of these items for the balance of
the year, as they have not occurred yet. Therefore, the Company is
unable to reconcile the full-year 2016 adjusted EBITDA guidance for
the acquisitions.
About Ferro Corporation
Ferro Corporation (http://www.ferro.com) is a leading
global functional coatings and color solutions company that
supplies technology-based performance materials, including
glass-based coatings, pigments and colors, and polishing materials.
Ferro products are sold into the building and construction,
automotive, appliances, electronics, household furnishings, and
industrial products markets. Headquartered in Mayfield
Heights, Ohio, the Company has approximately 4,900 employees
globally and reported 2015 sales of $1.1 billion.
About Cappelle Pigments
Cappelle Pigments (www.Cappelle.be) is a privately owned
producer of high-grade organic and inorganic pigments. The
125-year-old company is headquartered in Belgium with an additional
production site in France. Cappelle has a worldwide representation
and sales in more than 75 countries. Main products are Bismuth
Vanadates, transparent iron oxides and organic high-performance
pigments.
Cautionary Note on Forward-Looking Statements
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of Federal
securities laws. These statements are subject to a variety of
uncertainties, unknown risks, and other factors concerning the
Company's operations and business environment. Important factors
that could cause actual results to differ materially from those
suggested by these forward-looking statements and that could
adversely affect the Company's future financial performance include
the following:
- Ferro's ability to complete
acquisitions, effectively integrate the businesses and achieve the
expected synergies (including the Cappelle Pigments, Delta,
Pinturas Benicarló, Ferer, Al Salomi, Nubiola and
Vetriceramici transactions), as well as the acquisitions being
accretive and Ferro achieving the expected returns on invested
capital;
- Ferro's ability to successfully
implement and/or administer its cost-saving initiatives, including
its restructuring programs, and to produce the desired
results;
- demand in the industries into which
Ferro sells its products may be unpredictable, cyclical, or heavily
influenced by consumer spending;
- the effectiveness of the Company's
efforts to improve operating margins through sales growth, price
increases, productivity gains, and improved purchasing
techniques;
- currency conversion rates and economic,
social, political, and regulatory conditions around the world;
- Ferro's ability to successfully
introduce new products or enter into new growth markets;
- the impact of interruption, damage to,
failure, or compromise of the Company's information systems;
- restrictive covenants in the Company's
credit facilities could affect its strategic initiatives and
liquidity;
- Ferro's ability to access capital
markets, borrowings, or financial transactions;
- the availability of reliable sources of
energy and raw materials at a reasonable cost;
- increasingly aggressive domestic and
foreign governmental regulations on hazardous materials and
regulations affecting health, safety and the environment;
- sale of products into highly regulated
industries;
- limited or no redundancy for certain of
the Company's manufacturing facilities and possible interruption of
operations at those facilities;
- competitive factors, including intense
price competition;
- Ferro's ability to protect its
intellectual property or to successfully resolve claims of
infringement brought against it;
- the impact of operating hazards and
investments made in order to meet stringent environmental, health
and safety regulations;
- management of Ferro's general and
administrative expenses;
- Ferro's multi-jurisdictional tax
structure and its ability to reduce its effective tax rate,
including the impact of the Company's performance on its ability to
utilize significant deferred tax assets;
- the effectiveness of strategies to
increase Ferro's return on invested capital, and the short-term
impact that acquisitions may have on return on invested
capital;
- stringent labor and employment laws and
relationships with the Company's employees;
- the impact of requirements to fund
employee benefit costs, especially post-retirement costs;
- implementation of new business
processes and information systems, including the outsourcing of
functions to third parties;
- risks associated with the manufacture
and sale of material into industries making products for sensitive
applications;
- exposure to lawsuits in the normal
course of business;
- risks and uncertainties associated with
intangible assets;
- Ferro's borrowing costs could be
affected adversely by interest rate increases;
- liens on the Company's assets by its
lenders affect its ability to dispose of property and
businesses;
- Ferro may not pay dividends on its
common stock in the foreseeable future;
- amount and timing of any repurchase of
Ferro's common stock; and
- other factors affecting the Company's
business that are beyond its control, including disasters,
accidents and governmental actions.
The risks and uncertainties identified above are not the only
risks the Company faces. Additional risks and uncertainties not
presently known to the Company or that it currently believes to be
immaterial also may adversely affect the Company. Should any known
or unknown risks and uncertainties develop into actual events,
these developments could have material adverse effects on our
business, financial condition and results of operations.
This release contains time-sensitive information that reflects
management's best analysis only as of the date of this release. The
Company does not undertake any obligation to publicly update or
revise any forward-looking statements to reflect future events,
information, or circumstances that arise after the date of this
release. Additional information regarding these risks can be found
in our Annual Report on Form 10-K for the period
ended December 31, 2015.
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version on businesswire.com: http://www.businesswire.com/news/home/20161017005773/en/
Ferro CorporationInvestors:John Bingle, 216-875-5411Treasurer
and Director of Investor Relationsjohn.bingle@ferro.comorMedia:Mary
Abood, 216-875-5401Director, Corporate
Communicationsmary.abood@ferro.com
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