A. Schulman makes hostile offer for Ferro

By Don Loepp
Editor

Published: March 4, 2013 8:17 am ET
Updated: March 4, 2013 4:55 pm ET

Related to this story

Topics Materials, Mergers & Acquisitions, Materials Suppliers
Companies & Associations A. Schulman Inc., Ferro Corp.

FAIRLAWN, OHIO — Compounder and resin distributor A. Schulman Inc. has made an offer to buy Ferro Corp., a specialty chemical company with compounding operations.

Schulman disclosed the offer on March 4, but noted that Ferro had turned down the deal.

Fairlawn-based Schulman said it first contacted Ferro in November, and that it had expressed its "strong intent" in pursuing a deal in a letter to Ferro on Feb. 13. Ferro's board "rejected A. Schulman's offer and expressed their belief that the company should remain independent," Schulman disclosed.

The offer is for $6.50 per Ferro share — half in cash, half in Schulman common stock. According to Schulman, the offer represents an estimated total enterprise value of $855 million including equity value of $563 million —- and a 25 percent premium over Ferro's March 1 closing price.

"A. Schulman and Ferro are both recognized leaders in specialty chemicals with value-added product lines, similar business models, complementary competencies, markets and applications," said Joseph Gingo, Schulman's chairman, president and CEO, in a news release. "We believe our combination will deliver superior value to our respective shareholders and offer better value to customers, and we would welcome the opportunity to engage in a mutually beneficial dialogue with Ferro's board and management."

Gingo said the deal would provide annual synergies of $35 million — including consolidation of corporate offices, integration of the plastics business, pricing and sourcing efficiencies, cross selling and value selling.

"Accordingly, we request the Ferro board reconsider their expressed position to remain independent. We also encourage Ferro shareholders to communicate with their Board, and ask them to re-examine their decision regarding our offer. We believe that our offer will bring attractive and timely value creation to both Ferro and A. Schulman shareholders," Gingo said.

Ferro is based in Mayfield Heights, Ohio. The company's specialty plastics business includes filled and reinforced plastics, liquid colors, dispersions, gelcoats, and advanced alloys and compounds.

Ferro has been a company in turmoil since last year.

Last November, James Kirsch, chairman, president and CEO of Ferro, resigned from those posts, less than three weeks after the company on Oct. 30 posted a third-quarter loss of $316 million as it absorbed significant charges related in part to its beleaguered solar pastes business.

On Feb. 6, Ferro said it sold its solar pastes business to Heraeus, a privately owned precious metals and technology company based in Hanau, Germany. Terms of the transaction were not disclosed.

In January, a group of Ferro investors said it planned to nominate three directors for election to the company's board.

The group calls itself the Shareholder Committee for the Future of Ferro and is led by FrontFour Capital Group LLC of Stamford, Conn., and Quinpario Partners LLC of New York. It said it is nominating the three director candidates — David A. Lorber, Jeffry N. Quinn and Nadim Z. Qureshi — because it is concerned about Mayfield Heights-based Ferro's “historic and current under-performance.”

Scott Suttell, managing editor of Crain's Cleveland Business, contributed to this report.


Comments

A. Schulman makes hostile offer for Ferro

By Don Loepp
Editor

Published: March 4, 2013 8:17 am ET
Updated: March 4, 2013 4:55 pm ET

Post Your Comments


Back to story


More stories

Private equity firm buys majority share of truck accessory maker

July 31, 2014 10:30 am ET

A majority share of Ann Arbor, Mich.-based truck accessory manufacturer Tectum Holdings Inc. has been acquired by Boston-based private equity firm TA ...    More

Image

Castle Harlan buys landscape erosion control firm Tensar

July 30, 2014 3:46 pm ET

Private equity group Castle Harlan inc. has acquired Atlanta-based Tensar Corp., with plans for the geosynthetic products maker and its subsidiaries...    More

Image

Styrolution will open new production late 2014

July 30, 2014 12:54 pm ET

Germany-based styrenic materials group, Styrolution, has announced it is expanding its facility in Ludwigshafen, Germany.    More

Unipex Group buys Ferguson Chemical Innovation

July 29, 2014 1:57 pm ET

Chemical distributor Unipex Group Inc. announced July 29 that it had purchased Ferguson Chemical Innovation, a Brampton, Ontario-based supplier of...    More

Image

Universal Polymer beefing up capabilities through acquisition

July 29, 2014 12:04 pm ET

Universal Polymer & Rubber Ltd. is growing again and adding to its capabilities, this time via another acquisition and a plant expansion.    More

Market Reports

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events