A. Schulman Inc. failed in its attempt last year to buy Ferro Corp. in what it said would have been a “transformative” acquisition.
On Wednesday, the Fairlawn polymer company said it has a deal to buy the Ferro assets it coveted.
Schulman will spend $91 million to buy the majority of assets in Ferro’s Specialty Plastics business segment. The acquisition is expected to close by Aug. 31, the end of Schulman’s fiscal year, pending regulatory approval.
Shareholders liked the news.
Schulman stock was up $1.03, or 3 percent, to $35.19. Shares are up 1 percent, including dividends, since Jan. 1 and are up 29.2 percent from a year ago.
Schulman will get four of Ferro’s U.S. facilities and a plastics operation in Spain. The U.S.-based Ferro plastic manufacturing facilities are in Stryker, Ohio; Evansville and Plymouth, Ind.; and Carpentersville, Ill. Not included in the Schulman deal are Ferro’s plastic business and operations in Edison, N.J., and in Venezuela.
Ferro, in a separate announcement, also said it is planning to sell off its Polymer Additives business. It said it has hired KeyBanc Capital Markets as an adviser.
“Specialty Plastics is a performance-driven, technically demanding business, and this business segment is what initially attracted us to seek to acquire Ferro back in 2013,” Joseph Gingo, Schulman chairman, president and chief executive officer said in a news release. “When finalized, this will be the ninth acquisition we have successfully completed over the past four years, in addition to three joint ventures, as we continue to execute our aggressive growth strategy driven by organic growth and acquisitions.”
Schulman, which makes and supplies plastic compounds and resins, in March 2013 announced it was trying to buy Ferro for $855 million in stock, cash and debt. If the $6.50-per-share deal had gone through, the purchase would have about doubled the size of Schulman, a $2.1 billion company.
Ferro’s board and top executives successfully fought the unsolicited deal, however, and Schulman dropped its bid in July.
Gingo said Schulman will “leverage [Ferro’s Specialty Plastics] capabilities, competitive advantages and footprint to become an integral part of our growth engine.”
He said Schulman’s goal is to add $100 million in sales annually through acquisitions.
“While this large bolt-on acquisition exceeds that target, it more importantly is an excellent strategic fit with A. Schulman and provides us with an expanded geographic reach, not only in the United States, but also in Spain,” Gingo said.
Schulman is improving its position in target markets, diversifying its products and increasing prospects for sustainable and profitable growth, he said.
Ferro, a specialty chemical maker based in Mayfield Heights, said the sales are part of a strategy to focus on its Performance Materials product lines. The company said it is building on what it said are core competencies in glass and color technologies.
Shares of Ferro fell 17 cents to $12.99.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.