FAIRLAWN, OHIO (June 25, 12:40 p.m. ET) – A. Schulman Inc. is among a group of Ohio's largest manufacturers that are on a buying spree that shows no signs of abating.
Flush with cash from three years of post-recession savings, they're putting their reserves to use in the purchase of companies. Since June 2011, the 10 largest publicly traded manufacturing companies in Northeast Ohio acquired 29 businesses, more than half of which were based outside the United States. In the previous year, the numbers were nearly similar.
When Joseph Gingo joined Fairlawn-based A. Schulman Inc. in 2008 as CEO, he immediately set to work increasing cash levels at the resin compounder and distributor, in order to stabilize the company. As of last Feb. 29, the end of A. Schulman's fiscal second quarter, the company had $95.8 million in cash and $201.5 million in untapped credit lines.
“If you want to grow and increase profits, one of the areas you have to look at is acquisitions,” Gingo said. “When you have a lot of cash, you can buy things.”
In the past year, A. Schulman has agreed to acquire Elian SAS, a French producer of specialized color master batch products, for $63 million, and bought a majority interest in an Argentina-based maker of rotational molding materials.
Because Europe and the United States have been slower-growth markets, A. Schulman has focused on expanding in emerging markets where there is more growth potential, Gingo said. That's the thinking behind the company's 50-50 joint venture agreement with National Petrochemical Industrial Co. of Saudi Arabia to produce polypropylene compounds at a plant in that Middle Eastern nation. A. Schulman's initial investment in the relationship is about $14 million, with project costs for the Saudi plant estimated at $70 million.
“Several aspects of this deal will accelerate A. Schulman's expansion and visibility in its priority growth markets of Africa, India and the Middle East while better serving our existing global customers with high-quality polypropylene compounds,” Bernard Rzepka, general manager and chief operating officer of A. Schulman, Europe, Middle East, Africa, said in announcing the joint venture June 11.
The full story, “Region's manufacturers buoyed by buying binge, Cash surplus has led to bevy of acquisitions,” is available at www.crainscleveland.com.