Ferro Corporation Signs Agreement to Divest Tile Coatings Business
December 16 2019 - 7:39AM
Business Wire
Ferro Corporation (NYSE: FOE) (the Company), a leading global
supplier of technology-based functional coatings and color
solutions, today announced it has entered into a definitive
agreement to sell its Tile Coatings Business to Pigments Spain,
S.L., a company of the Esmalglass-Itaca-Fritta group, which is a
portfolio company of Lone Star Funds, for $460 million in cash,
with the potential for an additional $32 million in cash based on
the performance of the business pre-closing, subject to customary
adjustments. Consummation of the sale is subject to the receipt of
regulatory approvals and the satisfaction or waiver of other
customary closing conditions.
With annual sales of approximately $510 million for the twelve
months ended September 30, 2019, Ferro’s Tile Coatings Business
produces coatings for ceramic tiles used in residential and
non-residential construction. Historically, it has been part of the
Company’s Performance Coatings reporting segment, along with
Ferro’s Porcelain Enamel Business, which will be retained.
"This transaction will substantially advance the Dynamic
Innovation and Optimization phase of our strategy and strengthen
our balance sheet,” said Peter Thomas, Chairman, President and CEO
of Ferro Corporation. “It will result in a Ferro more fully focused
on higher-growth industries where our market-leading technology,
innovation, and customer-centric service generate higher gross
margins. The transaction also will reduce our manufacturing
footprint and end-market exposure in Europe, optimizing our
portfolio with more equal balance between Europe and the rest of
world and with less exposure to commercial and residential
construction markets. Given these strategic benefits, and the
enhanced balance sheet resulting from the transaction, we are
confident that divesting the Tile Coatings Business will deliver
substantial value for our shareholders.
We also are very pleased that our Tile Coatings colleagues will
have the opportunity to grow the business and thrive under new
ownership.”
Mr. Thomas added that the net proceeds from the sale principally
will be used to pay down debt.
In accordance with U.S. Generally Accepted Accounting
Principles, the Company expects the Tile Coatings Business will be
classified as "held for sale" and reported as discontinued
operations.
Lazard is acting as financial advisor and Jones Day is serving
as legal counsel to Ferro on the transaction. The Company expects
to discuss additional details of the transaction during its fourth
quarter 2019 earnings conference call.
Esmalglass-Itaca-Fritta group, based in Villarreal, Spain, is a
manufacturer of colors and glazes for the ceramic sector with an
approximate turnover of 470 million euros in 2018.
Esmalglass-Itaca-Fritta produces and markets a wide variety of
value added products used in manufacturing and tile decoration. It
supplies ceramic manufacturers globally through manufacturing and
mixing facilities, warehouses, and technical and design teams
around the world. Esmalglass-Itaca-Fritta has approximately 1,650
employees.
About Ferro Corporation
Ferro Corporation (www.ferro.com) is a leading global supplier
of technology-based functional coatings and color solutions. Ferro
supplies functional coatings for glass, metal, ceramic and other
substrates and color solutions in the form of specialty pigments
and colorants for a broad range of industries and applications.
Ferro products are sold into the building and construction,
automotive, electronics, industrial products, household furnishings
and appliance markets. The Company’s reportable segments include:
Performance Coatings (metal and ceramic coatings), Performance
Colors and Glass (glass coatings), and Color Solutions.
Headquartered in Mayfield Heights, Ohio, the Company has
approximately 5,900 associates globally and reported 2018 sales of
$1.6 billion.
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 successfully complete the sale of its Tile
Coatings Business, including obtaining the requisite regulatory
approvals;
- 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 in the U.S. and around the world;
- the availability of reliable sources of energy and raw
materials at a reasonable cost;
- Ferro’s ability to successfully implement and/or administer its
optimization initiatives, including its investment and
restructuring programs, and to produce the desired results;
- Ferro’s ability to successfully introduce new products and
services or enter into new growth markets;
- Ferro’s ability to identify suitable acquisition candidates,
complete acquisitions, effectively integrate the acquired
businesses and achieve the expected synergies, as well as the
acquisitions being accretive and Ferro achieving the expected
returns on invested capital;
- competitive factors, including intense price competition;
- the impact of damage to, or the interruption, failure or
compromise of the Company’s information systems due to events
including but not limited to aging information systems
infrastructure, computer viruses and cyber security breaches;
- the implementation and operations of business information
systems and processes;
- increased, and possibly inconsistent, domestic and foreign
regulations of privacy and data security;
- 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;
- increasingly aggressive domestic and foreign governmental
regulation of hazardous and other materials and regulations
affecting health, safety and the environment;
- our ability to address safety, human health, product liability
and environmental risks associated with our current and historical
products, product life cycles and production processes;
- exposure to lawsuits, governmental investigations and
proceedings relating to current and historical operations and
products;
- sale of products and materials into highly regulated
industries;
- limited or no redundancy for certain of the Company’s
manufacturing facilities and possible interruption of operations at
those facilities;
- Ferro’s ability to protect its intellectual property, including
trade secrets, or to successfully resolve claims of infringement
brought against it;
- 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 impact of the Tax Cuts and Jobs Act on our business;
- Ferro’s borrowing costs could be affected adversely by interest
rate increases;
- stringent labor and employment laws and relationships with the
Company’s employees;
- management of Ferro’s general and administrative expenses;
- the impact of requirements to fund employee benefit costs,
especially post-retirement costs;
- implementation of 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;
- our ability to attract and retain key personnel;
- changes in U.S. and other governments’ trade policies;
- risks and uncertainties associated with intangible assets;
- liens on the Company’s assets by its lenders affect its ability
to dispose of property and businesses;
- amount and timing of any repurchase of Ferro’s common
stock;
- challenges associated with a multi-national company such as
Ferro competing lawfully with local competitors in certain regions
of the world;
- the effectiveness of strategies to increase Ferro’s return on
invested capital, internal rate of return and other return metrics,
and the short-term impact that acquisitions may have on such
metrics; 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 year ended December 31,
2018.
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version on businesswire.com: https://www.businesswire.com/news/home/20191216005364/en/
Ferro Corporation Investor & Media Contact:
Kevin Cornelius Grant, 216.875.5451 Director of Investor Relations
and Corporate Communications kevincornelius.grant@ferro.com
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