Materials firm A. Schulman Inc. has kept its buying streak alive with its biggest deal yet – acquiring compounder and composites maker Citadel Plastics Holdings Inc. for $800 million.
“Today's announcement marks a significant strategic milestone as we continue to transform the company beyond plastics compounding into a premier specialty plastics organization,” Schulman President and CEO Bernard Rzepka said in a March 16 news release.
Citadel has annual sales of $525 million, employing 1,200 at 21 plants, including 17 in North America. The company was founded in 2007 by private equity firm Wind Point Partners of Chicago, which then grew the business through several acquisitions before selling it to Palo Alto, Calif.-based HGGC — another private equity firm — in 2012.
According to the release, Chicago-based Citadel had earnings before interest, taxes, depreciation and amortization of $75 million in 2014. That means the sale price has a healthy earnings multiple of 10.7.
“Over the years, A. Schulman has proven itself to be a preferred industry leader that understands how to unlock the growth potential of strategic assets,” Citadel CEO Mike Huff said in the release. “We look forward to maximizing our full potential as an integral part of A. Schulman.”
For Fairlawn, Ohio-based Schulman, the deal is the 11th acquisition or joint venture in less than six years, but is by far the largest. The firm spent less than $600 million combined on the previous 10 deals, with the largest being its 2010 acquisition of ICO Inc. for almost $200 million.
Schulman's sales grew almost 15 percent to more than $2.4 billion in its 2014 fiscal year, which ended Aug. 31. The firm's profit also more than doubled to almost $57 million.
