Ferro completes acquisition of Egyptian tile coatings manufacturer Al Salomi for Frit and Glazes.
Ferro Corporation has announced that it has completed the acquisition of Egypt-based tile coatings manufacturer Al Salomi for Frit and Glazes (‘Al Salomi’) for approximately $36mn, including the assumption of debt, and subject to customary working capital and other purchase price adjustments. The acquisition was previously announced on September 3, 2015.
Al Salomi is one of the leading manufacturers of frits and glazes in the Middle East and North Africa (‘MENA’). Al Salomi’s 5,600-square meter plant, located in Suez, Egypt, is state-of-the-art, including continuous furnaces and computerized production lines. It is expected to be one of Ferro’s lowest cost frit production sites. Current production capacity is 55,000 metric tons per year. An additional two lines, or 12,000 metric tons per year, of new tile coatings capacity is under construction and due to be operational in early 2016. The plant, which will be Ferro’s second frit production facility in Egypt, includes additional land and certain infrastructure assets to support expected growth.The transaction was funded with excess cash and borrowings under the Company’s existing revolving credit facility. Based on 2014 EBITDA, excluding expected synergies, the acquisition purchase price represents a transaction multiple of approximately 8.0. Including synergies and the commercial benefits associated with the two additional frit production lines now under construction, the transaction multiple would be approximately 5.7. The transaction is not expected to significantly impact Ferro’s 2015 earnings but is expected to be accretive to adjusted diluted earnings per share by $0.03 to $0.06 in 2016.
‘We are excited to complete the acquisition of Al Salomi and welcome the Al Salomi team to Ferro,’ said Peter Thomas, Chairman, President and CEO of Ferro Corporation. ‘The acquisition will provide much-needed production capacity, as we have been running at or near capacity levels at our existing plants in Spain and Egypt for some time.’
He continued, ‘Despite current weakness, the MENA region remains a very attractive, growing market for tile and porcelain enamel products. This acquisition, combined with our investments in Turkey, strengthens our position as a market leader. These investments are consistent with our growth strategy, which is to expand sales in emerging markets, accelerate product development efforts, and build upon our leading market positions in glass-based coatings and color solutions. We continue to actively pursue a number of other transactions to build out all three of our business segments.’
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