Boosting H.B. Fuller’s (NYSE:FUL) problem-solving potential, the
company today announces it has finalized its acquisition of Royal
Adhesives & Sealants for $1.575 billion. Few people realize the
impact of adhesives. They are everywhere, making virtually any
durable or consumer product better. Adhesives have the potential to
make the world a better place, and H.B. Fuller is tapping adhesives
in unique ways to improve a range of global issues.
H.B. Fuller, combined with Royal, deepens its expertise in
specialty and high-value applications used in a range of sectors,
including electronics, hygiene, medical, transportation, clean
energy, construction, and more. Together, the companies will enable
an interconnected world, support better use of the world’s finite
resources, improve food security and access to clean drinking
water, and address the challenges of a globally disperse and aging
population.
“This is an exciting step for Royal and our network of brands,”
said Royal Adhesives & Sealants CEO, Ted Clark. “Combining
these two businesses creates a more capable and dynamic company for
our customers and employees. We complement each other, selling in
adjacent markets with very little customer overlap, and that
presents an interesting number of growth opportunities. We offer
different technologies, expertise and capabilities. Yet, we share
the same passion for solving product development challenges by
discovering and applying innovations in adhesive technology.”
The acquisition expands H.B. Fuller’s product offering in
engineering, durable assembly and construction adhesives and makes
H.B. Fuller the world’s largest supplier of adhesives for
insulating glass and commercial roofing applications. Of the top
adhesives manufacturers, H.B. Fuller is the only one singularly
focused on adhesive and sealant technologies.
“We are passionate about being the best adhesives provider in
the world, and we’ve been investing significantly over the last
decade to make it a reality,” said H.B. Fuller CEO Jim Owens. “With
complementary adhesives expertise from Royal, we’re able to make an
even bigger impact on improving people’s lives. Our customers will
benefit from a broader portfolio and expanded development and
production capabilities. We’ll be a more capable and dynamic
company with additional opportunities for the thousands of
dedicated H.B. Fuller and Royal employees around the world. And,
the acquisition accelerates our business strategy and positions us
to exceed our 2020 targets.”
H.B. Fuller also expects the combined businesses to deliver very
strong cash flow to pay down debt at an accelerated pace. Owens
adds, “With this acquisition, we have created immediate value for
shareholders based on Royal’s solid organic growth track record,
high EBITDA margin and strong rate of cash flow conversion. Looking
ahead, we will now begin our planned three-year integration,
including leveraging the $15 million in growth synergies and $35
million in cost synergies we identified prior to closing this
transaction.”
A broader range of highly specified adhesives
technologiesWith the addition of Royal, H.B. Fuller will
be able to add more value to its customers in key markets that
require highly specified adhesive technology. The combined
companies’ comprehensive suite of products support innovative
product design with the potential to touch everything from our
clothes, homes and workspaces to how we communicate and travel.
For example, the electronification of cars has revolutionized
vehicles from mechanical machines to electronic devices, and it is
changing how vehicles are manufactured and serviced. Together, H.B.
Fuller and Royal now bring the whole package to OEMs – from
electronics applications, interior trim, and interior and exterior
lighting to powertrain under the hood and exterior structural
bonding. Royal also brings rubber-to-metal bonding adhesives, a
highly difficult application in the automotive
industry.
From engineered wood applications and panel lamination to
advancements in insulating glass, H.B. Fuller now has one of the
world’s most complete lines of durable assembly adhesive offerings.
The acquisition of Royal’s KÖMMERLING business—a well-established
and respected provider of insulating glass and other high-value
adhesive and sealant applications for manufacturers of durable
goods—will enable us to leverage its well-established sales
channels to deliver this technology to a broader range of customers
in North America and to accelerate the introduction of insulating
glass sealant innovations in China and the Asia Pacific region.
The acquisition also nearly doubles the size of H.B. Fuller’s
construction adhesives portfolio. Adding to H.B. Fuller’s expertise
in tile setting and flooring installation, Royal is the market
leader in the commercial low-slope roofing category. They also add
capabilities in insulation attachment and waterproof bonding.
Collectively, H.B. Fuller now advances quality building
construction from the floor to the roof.
H.B. Fuller has acquired Royal from affiliates of American
Securities LLC, based in New York with an office in Shanghai. To
learn more about the transaction, visit
www.hbfuller.com/royal.
About H.B. Fuller Company: Since 1887, H.B.
Fuller has been a leading global adhesives provider focusing on
perfecting adhesives, sealants and other specialty chemical
products to improve products and lives. With fiscal 2017 pro
forma net revenue of over $2.8 billion, H.B. Fuller’s commitment to
innovation brings together people, products and processes that
answer and solve some of the world's biggest challenges. Our
reliable, responsive service creates lasting, rewarding connections
with customers in electronics, disposable hygiene, medical,
transportation, aerospace, clean energy, packaging, construction,
woodworking, general industries and other consumer businesses. And,
our promise to our people connects them with opportunities to
innovate and thrive. For more information, visit us
at www.hbfuller.com.
Safe Harbor for Forward-Looking Statements:
Certain statements in this document may be considered
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
subject to various risks and uncertainties, including but not
limited to the following: the Royal transaction may involve
unexpected costs or liabilities; our business or stock price may
suffer as a result of uncertainty surrounding the transaction; the
substantial amount of debt we have incurred to finance our
acquisition of Royal, our ability to repay or refinance it or incur
additional debt in the future, our need for a significant amount of
cash to service and repay the debt and to pay dividends on our
common stock, and the effect of restrictions contained in our debt
agreements that limit the discretion of management in operating the
business or ability to pay dividends; various risks to stockholders
of not receiving dividends and risks to our ability to pursue
growth opportunities if we continue to pay dividends according to
the current dividend policy; we may be unable to achieve expected
synergies and operating efficiencies from the transaction within
the expected time frames or at all; we may be unable to
successfully integrate Royal’s operations into our own, or such
integration may be more difficult, time consuming or costly than
expected; following the transaction, revenues may be lower than
expected, and operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) may be greater than expected; risks that the transaction
disrupts current plans and operations and the potential
difficulties in employee retention as a result of the transaction;
the ability to effectively implement Project ONE; political and
economic conditions; product demand; competitive products and
pricing; costs of and savings from restructuring initiatives;
geographic and product mix; availability and price of raw
materials; the Company’s relationships with its major customers and
suppliers; changes in tax laws and tariffs; devaluations and other
foreign exchange rate fluctuations; the impact of litigation and
environmental matters; the effect of new accounting pronouncements
and accounting charges and credits; and similar matters. Further
information about the various risks and uncertainties can be found
in the Company’s SEC 10-K filing for the fiscal year ended December
3, 2016, and its SEC 10-Q filing for the quarter ended September 2,
2017. All forward-looking information represents management’s best
judgment as of this date based on information currently available
that in the future may prove to have been inaccurate. Additionally,
the variety of products sold by the Company and the regions where
the Company does business make it difficult to determine with
certainty the increases or decreases in net revenue resulting from
changes in the volume of products sold, currency impact, changes in
product mix, and selling prices. However, management’s best
estimates of these changes as well as changes in other factors have
been included.
Editor note: Please visit the online newsroom for additional
supporting content including quotes, video and photography.
Meagan BarnardInprela Communications+1 612 677
2036meagan@inprela.com
Max MarcyH.B. Fuller Investor Relations+1 651 236
5062max.marcy@hbfuller.com
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