Hillenbrand Inc. — parent company of auxiliary equipment maker K-Tron International Inc. and Rotex Global LLC — has now inked a deal to buy compounding extruder maker Coperion GmbH, creating a supplier system that it believes will become a major force in a growing North American polymer industry.
Complete designs that include both K-Tron and Coperion products can win a key spot in operations being built in the U.S. to take advantage of new natural gas supplies from hydraulic fracturing and horizontal drilling, Hillenbrand CEO Kenneth Camp said.
“The beauty here is that we can leverage so much more across the two companies,” Camp told analysts during an Oct. 16 conference call discussing the acquisition plan.
At the same time, Rotex's screening and material-separation equipment is used widely in the oil sands operations of the northern U.S. and Canada.
“The value [of the acquisition] is not just based on [financial] chop, cut and eliminate,” he said.
Hillenbrand expects to complete the deal in December or January, buying Coperion from Deutsche Beteiligungs AG of Frankfurt. Hillenbrand will pay $530 million, which includes an assumption of $99 million in debt and $130.4 million in pension liability.
P&M Corporate Finance LLC of Southfield, Mich., was a financial adviser to Hillenbrand during the transaction; and Skadden, Arps, Slate, Meagher & Flom LLP of New York was the legal adviser.
Coperion will become the largest company in Batesville, Ind.-based Hillenbrand's process equipment group, which includes K-Tron and Rotex.
Coperion's CEO Günter Bachmann will continue as president of Coperion, which will retain its headquarters in Stuttgart, Germany.
For the 12-month period ended Sept. 30, Coperion's sales were $675 million, Hillenbrand officials said. Once the acquisition closes, Hillenbrand's process equipment group will generate $1 billion in annual sales and represent about two-thirds of the firm's total revenue.
The other firm in the group, TerraSource Global, is a materials-handling specialist. Hillenbrand also owns Batesville Casket Co.
Camp said he first met Coperion's Bachmann during a trade show in Germany. During discussions the men discovered they had similar views of future economic prospects, he said.
“It was clear that we would meet again either as adversaries or allies,” Camp said.
By joining forces, both firms have access not only to complementary production, but also geographic opportunities. Only 20 percent of Coperion's current sales are in North America, while Hillenbrand's numbers are almost the opposite, said Joe Raver, president of the process equipment group. Jointly the companies will have manufacturing in Europe, North America and Asia.
“With this, we are adding several more steps within the value chain to [Coperion's system development],” Bachmann said. “This helps quite a bit, because instead of buying equipment or parts from someone else, we will have it within the company.”