Dec. 21, 2011
H.B. Fuller Announces Agreement to Acquire Forbo's Industrial Adhesives Business
H.B. Fuller Company announced today that it has signed an agreement to purchase
the global industrial adhesives business of
Forbo Group. The acquisition will enhance H.B.
Fuller's position as a global leader in the adhesives industry. The business to
be acquired represents about 80 percent (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.
* Forbo is a leading producer of flooring systems, adhesives, as well as power transmission and conveyor belt solutions.
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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. H.B. Fuller has committed financing from Morgan
Stanley Senior Funding, Inc., Citigroup Global Markets Inc. and JPMorgan Chase
Bank, N.A. to support the completion of this transaction. Prior to closing the
acquisition transaction, H.B. Fuller intends to raise permanent financing
through the private placement and syndicated bank loan markets.
H.B. Fuller has previously announced specific financial goals for organic growth
and EBITDA margin improvement and believes this acquisition will support
delivery of both objectives. Forbo is a highly respected supplier of industrial
adhesives, known for the breadth of its product line in all of H.B. Fuller's
core market segments, particularly packaging and durable assembly. With this
acquisition, H.B. Fuller will gain product technology and add people and skills
that will make the company stronger.
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 H.B.
Fuller President and Chief Executive Officer Jim Owens. "Upon closing of the
transaction, H.B. 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
percent, 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.
"Our intent is to fully capture the value of this transaction, and we will work
to achieve these benefits as quickly as possible. Our leadership team has
significant experience in capturing and realizing synergies. We have developed a
detailed synergy assessment and have modeled significant benefits in the
combined businesses," Owens said.
The acquisition of the Forbo industrial adhesives business by H.B. Fuller 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.
Morgan Stanley & Co. LLC is acting as H.B. Fuller's sole financial advisor in
relation to this acquisition.
About H.B. Fuller Company: For nearly 125 years, 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. Recognized for
unmatched technical support and innovation, H.B. Fuller brings knowledge and
strength to help its customers find precisely the right formulation for the
right performance. With fiscal 2010 net revenue of $1.36 billion, H.B. Fuller
serves customers in packaging, hygiene, paper converting, general assembly,
woodworking, construction, and consumer businesses. For more information, visit
us at www.hbfuller.com, read our blog, follow GlueTalk on Twitter or like us on
Facebook.