FAIRLAWN, OHIO (Dec. 13, 3:40 p.m. ET) — Omnova Solutions is exiting the commercial wallcovering business in North America.
The Fairlawn-based producer of emulsion polymers, specialty chemicals and wallcoverings said it has sold certain assets of its North American commercial wallcovering business to J. Josephson Inc., a private commercial wallcovering producer based in New Jersey.
Omnova said the sale includes printing cylinders, certain equipment, trademarks, contracts and other assets associated with its domestically produced commercial wallcovering brands. The sale excludes Omnova's manufacturing plant in Columbus, Miss., which will cease production about 12 to 15 months after the sale.
Under terms of the transaction, Omnova said it will receive about $10 million in cash and three years of royalty payments for future sales of Omnova-based patterns. In addition, Omnova will retain about $7 million in net working capital and the cash flow associated with those assets.
Under the agreement, Omnova will continue to make commercial wallcovering products for J. Josephson for a period of 12 to 15 months as part of what Omnova called “an orderly transition of production” from its Mississippi plant to the J. Josephson plant in South Hackensack, N.J.
“The sale of these commercial wallcovering assets will allow Omnova Solutions to focus resources on our Performance Chemicals business, where in the last year we made a strategically important acquisition to expand our global position, as well as those product lines within our Decorative Products portfolio that offer greater global growth potential, including coated fabrics, performance films, laminates, digitally printed wall murals and laminated wall surfaces for the ICS (interior construction systems) market,” Kevin McMullen, Omnova chairman and CEO, said in a statement.
McMullen said the commercial wallcovering market in North America “has experienced a prolonged weakness in demand, exacerbated by the multiyear downturn in construction, and is down 50-60 percent from pre-recession highs.”
“It was clear that consolidation was necessary for the long-term vitality of the commercial wallcovering industry,” McMullen said.
Concurrent with transferring commercial wallcovering production to J. Josephson, Omnova will consolidate manufacturing of coated fabric, film and specialty products made at its Columbus, Miss., plant into its other domestic and international Decorative Products facilities. Omnova plans to cease manufacturing at the Mississippi plant, but will continue its Decorative Products distribution operations at the site.