HB Fuller to acquire global industrial adhesives business from Forbo
HB Fuller Co. has signed an agreement to purchase the global industrial adhesives business of Forbo Group.
The acquisition will enhance HB Fuller’s position as a global leader in the adhesives industry, according to the company.
The business to be acquired represents about 80% (by revenue) of the Forbo Bonding Systems division of Forbo Group.
This business will generate approximately $580 million in revenue for the fiscal year ending December 31, 2011, operates 17 manufacturing facilities in 10 countries, and employs more than 1,100 people globally. Projected EBITDA for the business for the 2011 fiscal year is CHF 31 million, or about $35 million at 2011 actual exchange rates.
The purchase price for the transaction is CHF 370 million on a debt-free and cash-free basis, or about $394 million at current exchange rates. The consideration will be paid in cash at the time of closing.
Forbo is a highly respected supplier of industrial adhesives, known for the breadth of its product line in all of HB Fuller’s core market segments, particularly packaging and durable assembly, according to Fuller officials.
With this acquisition, HB Fuller will gain product technology and add people and skills that will make the company stronger, it said.
In addition, there will be sizable opportunities to capitalize on synergies and eliminate duplication in a number of areas, including raw material procurement, manufacturing and redundant services.
Annual pre-tax synergies of approximately $50 million are anticipated once the integration is complete in 2013. Cost in relation to achieving such synergies is expected to be approximately $60 million, incurred over the next two years.
"With this acquisition, we are taking a further step forward in realizing our strategic plans to accelerate growth and improve EBITDA margins," said HB Fuller CEO Jim Owens .
"Upon closing of the transaction, HB Fuller will be a $2 billion company, focused on attractive segments of the industrial adhesives market. The acquired Forbo business will fortify our presence in Europe and enhance the transformation of our own business in that region.
“It will increase our business in China by about 50%, and broadly strengthen our capability in our core markets. In addition, we will enhance our leadership position in North America, gain proprietary technology and become one of a handful of manufacturers capable of producing VAE emulsions.
The acquisition has been approved by the boards of directors of both companies. Subject to customary closing conditions and regulatory approvals, the transaction is expected to close as soon as March 2012.
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