By Frank Esposito
SENIOR STAFF REPORTER
Published: June 4, 2014 10:07 am ET
Updated: June 4, 2014 5:40 pm ET
Image By: Plastics News
Joseph Gingo
UPDATED — Less than a year after ending its effort to acquire Ferro Corp., A. Schulman Inc. is acquiring most of that firm’s Specialty Plastics business for $91 million in cash.
Officials with Mayfield Heights, Ohio-based Ferro also announced June 4 that the firm is looking for a buyer for its polymer additives business.
The deal with Schulman includes four U.S. plants — in Stryker, Ohio; Evansville and Plymouth, Ind.; Carpentersville, Ill. — and one in Castellon, Spain. Those locations make custom engineered plastic compounds, colorants and liquid coatings that are sold into packaging, transportation, construction and other markets.
Fairlawn, Ohio-based Schulman now has made nine acquisitions and formed three joint ventures in the last four years.
“Our immediate plans are to keep running these plants as they are,” Chairman, President and CEO Joseph Gingo said in a June 4 telephone interview with Plastics News. “They’re very complementary to us from a market and product fit.”
He added that the acquisition is “a positive thing for our U.S. business.
“It’s funny for a U.S.-based company to say we had to build up in the U.S., but that’s what we had to do,” Gingo said. “Europe always has been good to us, but the U.S. has been our turnaround story.”
Businesses included in the sale employ 300 and had sales of $154 million in 2013.
The deal does not include Ferro plants in Edison, N.J., and Carabobo, Venezuela, which make liquid thermoset resins.
Gingo said the businesses being acquired are what initially attracted Schulman to try to buy all of Ferro back in 2013.
Gingo said Schulman was contacted in late 2013 by Ferro officials — only a few months after Schulman had withdrawn its earlier bid to acquire all of Ferro in a deal valued at about $855 million. Schulman had first made its offer in March 2013, but it was rejected by Ferro’s board of directors, who considered it too low. After a lengthy war of words between the two firms and Ferro shareholders, Schulman withdrew the offer in July.
The Evansville plant primarily makes glass-filled polypropylene compounds, with a good portion of sales into the appliance market. The Stryker plant makes color and additive concentrates, while the Carpenterville location produces Alcryn-brand thermoplastic elastomers.
Ferro’s Specialty Plastics sales — including the two plants not included in the Ferro deal — were flat at just over $170 million in 2013, as the unit’s gross profit fell almost three percent to $28.4 million. In the first quarter of 2014, sales were up more than one percent to $45.3 million, with gross growing almost seven percent to $7.9 million. Based on sales, Specialty Plastics was the smallest of Ferro’s five operating units, both in full-year 2013 and in the first quarter of 2014.
The parts of the Specialty Plastics unit being sold by Ferro “are the ones that most fit with Schulman in the first place,” said Bill Ridenour, a former Ferro executive who’s now owner of the Polymer Transaction Advisors Inc. consulting firm in Newbury, Ohio. Ridenour has worked with Schulman, but was not involved with the Ferro deal. He also described the Alcryn TPE business as “the nicest piece” of what Schulman was acquiring from Ferro.
Ferro officials said the firm has retained KeyBanc Capital Markets of Cleveland to help find a buyer for the Polymer Additives business, which had sales of almost $293 million in 2013. That total was down almost 9 percent from 2012. The unit’s gross profit also fell more than 9 percent to $27.1 million in 2013.
For the first quarter of 2014, Ferro’s Polymer Additives unit posted sales of $69.7 million, down almost 14 percent vs. the year-ago quarter. The unit’s first-quarter gross profit also fell almost 17 percent to $7.4 million.
Products made by Ferro’s Polymer Additives business include heat and light stabilizers, plasticizers, biocides, and lubricants that help improve the characteristics or processing of PVC, polyolefin, urethanes, ABS, polystyrene, and rubber products. The unit includes four U.S. plants, as well as single plants in Mexico, Malaysia, Belgium, China and Japan.
Peter Thomas, chairman, president and CEO of Ferro, said the company wants to focus its resources on its performance materials product lines, and create a portfolio of higher-growing businesses.
“Our strategic vision is to become the premier global functional coatings and color solutions company, building on our core competencies in glass and color technologies,” Thomas said in a news release. | 
