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Topics Mergers & Acquisitions, Construction, Pipe/Profile/Tubing
Companies & Associations CertainTeed Corp., Cie de Saint-Gobain, Westlake Polymers Corp.
HOUSTON -- Westlake Chemical Corp. plans to expand its vinyl pipe offerings and capacity by acquiring Cie. de Saint-Gobain's pipe and foundation group in the United States. The business to be acquired is part of Saint-Gobain's CertainTeed Corp. subsidiary.
Westlake's pipe and profile business operates as Houston-based North American Pipe Corp.
CertainTeed's pipe plants are in Lodi, Calif., and McPherson, Kan. Westlake agreed to pay $175 million in cash, including $22 million of working capital and closing adjustments. The price is 7.2 times the business's EBITDA of US$24 million in 2012.
The parties expect to complete the deal in the second quarter of 2013, subject to normal conditions and regulatory approvals.
"The acquisition of CertainTeed's PFG business is an excellent strategic fit for Westlake," noted Westlake President and CEO Albert Chao in a March 6 news release. "When completed, it will enhance our North American Pipe and building products portfolio by adding specialty product lines and supporting technology that we do not currently have. These new products, technologies, and a broader market reach will increase our ability to service our customers' needs and further differentiate the value of our vinyls integration strategy."
Plants in Lodi and McPherson make PVC pipe, fittings, profiles and foundations and have total production capacity of about 150 million pounds per year. They employ about 200. Specialized products include Certa-Lok restrained joint pipe and Yelomine branded products. The plants supply municipal, agricultural, mining, well and irrigation applications.
Paris-based Saint-Gobain said its exterior products division will focus on the habitat market. Sale proceeds will help Saint-Gobain acquire small- and medium-sized businesses.
Westlake's North American Pipe Corp. business runs 10 plants in the United States and Canada. It had estimated sales of $630 million in 2011, mainly for pipe, according to Plastics News' most recent pipe, profile and tubing survey.
Saint-Gobain did not comment on whether it would make any changes in its Saint-Gobain Performance Plastics Corp. business in Aurora, Ohio, which includes seven plants making tubing, profiles and a small amount of pipe. Plastics News estimates the business's pipe, profile and tubing operations generated estimated sales of $74 million in 2011.