Myers Industries Inc. has found a buyer for its lawn and garden business.
The Akron, Ohio, conglomerate said Jan. 8 that it agreed to sell the segment to private equity firm Wingate Partners V LP of Dallas. It agreed to a $115 million sale price and expects to close the deal early this year after customary closing conditions.
Myers announced its plan to sell the non-strategic lawn and garden business in June to focus on core growth platforms such as material handling and distribution. At the time it said the sale process could take as much as a year. Investment bank William Blair & Co. helped Myers find the buyer. The lawn and garden business injection molds planters and pots and produces related items.
Wingate's current portfolio lists only one business directly related to polymers. Its Preferred Compounding Inc. subsidiary in Barberton, Ohio, custom compounds rubber and elastomeric compounds. Another business, Stein World of Memphis, Tenn., could be seen as related to Myers' lawn and garden segment. Stein World imports and distributes decorative home accents such as furniture and tables. Wingate's diverse portfolio includes businesses in safety products, metal components, specialty paper, oil and gas equipment and food processing.
Myers recently restructured the lawn and garden business, consolidating production in Middlefield, Ohio, and Sparks, Nev., and closing operations in Waco, Texas, and Brantford, Ontario.
A Wells Fargo research note stated the sale price for the lawn and garden business includes $90 million in cash on closing and a $25 million subordinated promissory note due in five years. The equity research company expects Myers will use the proceeds to reduce debt it incurred with the acquisition last year of Scepter Corp.
Scepter, a producer of portable fuel containers, totes and bins, fits Myers' material handling business. Adding Scepter will lead to about $2 million in annual material cost savings and plant efficiencies, Myers explained when it finalized the Scepter purchase. The material handling business encompasses a variety of mostly plastic products sold to industrial, agricultural, automotive, commercial and consumer markets. Its other main segment, distribution, involves tools and other equipment sold to tire and vehicle servicing companies.
“Management did a commendable job of extracting additional value from the [lawn and garden] business given restructuring savings yet to be realized,” Wells Fargo senior analyst Christopher Manuel said in a research report.
Myers' lawn and garden segment saw an 18 percent decline in sales to $49.8 million for the first quarter ended March 30, 2014. Loss before taxes was $100,000. Myers subsequently stopped reporting the segment's results because it was slated to be sold.
Myers reported a 14.6 percent sales hike to $162.1 million for continuing businesses in the third quarter ended Sept. 30, largely due to inclusion of Scepter's results. Even so, Scepter's sales and profitability were hurt by weak sales of outdoor power equipment. Income from continuing operations of $2.31 million was only about a third of the income logged in the quarter a year ago.