Finnish composites producer Exel Composites plc plans to establish North American production through the acquisition of Diversified Structural Composites Inc. in Erlanger, Ky.
Exel announced April 23 that it agreed to buy all of DSC from Teijin Carbon America. DSC mainly uses pultrusion to make carbon- and glass-fiber reinforced thermoset products, particularly structural parts for wind turbines.
The purchase will give Exel manufacturing capacity in North America to complement its factories in Europe and China. DCS employs about 90 and for the fiscal year ended March 31 2018 had sales of $19 million and an operating loss of nearly $1 million. Exel stated that restructuring programs should make DSC profitable next year.
"The American market is the second largest composites market globally in terms of value and growth, right after the Asian market," noted Exel President and CEO Riku Kytömäki in a news release.
Kytömäki said DSC is a good strategic fit because it is focused on the same high growth markets, especially wind energy and transportation. The deal will expand Exel's technology tool kit and should help optimize supply chains.
In April 2017, Exel finalized its purchase of Nanjing Jianhui Composite Materials Co. Ltd. The acquisition included a production plant in Nanjing, China, where Exel already had a factory.
By the end of 2017 Exel transferred all manufacturing from Australia to China and Nanjing Jianhui is now its production base for the Asia Pacific region. The two plants in China supply domestic markets as well as exports.
Exel production plants use pultrusion, continuous lamination and pre-preg molding to create parts for transportation, wind energy, telecommunications, sports and a range of industrial items. It also uses pullwinding, an advanced pultrusion technology that controls fiber content and orientation for reducing wall thickness and part weight. It processes glass fibers, carbon fibers and aramid fibers with unsaturated polyesters, vinyl esters, epoxies, polyurethanes and other resins.
Exel agreed to a debt-free purchase price of about $10 million. About 60 percent of the price relates to DSC's business with the rest applied to working capital. It expects to finalize the deal in May 2018.
Exel, traded on the Helsinki Nasdaq exchange, logged sales of 86.3 million euros ($105.3 million) last year. During the period it posted operating profit of 6.3 million euros ($7.7 million). European customers accounted for 74 percent of sales, followed by Asia, with a 21 percent share. It lumped sales in the rest of the world together last year to account for 5 percent of sales. Industrial applications were its largest sales segment, making up 56 percent of revenue. Construction and infrastructure represented 25 percent of sales and all other uses combined make up the rest of sales.
Exel spent 71 percent of its capital investments in Asia last year. Europe accounted for 29 percent of the 10 million euros ($12.2 million) total budget while the rest of world received negligible capital expenditures.
Exel adjusted its outlook for 2018 slightly upward as a result of the DCS agreement. Coincident with its DCS announcement it said it expects 2018 sales to "increase significantly" compared to "increase" in its earlier forecast.
The seller of DSC expects to benefit from the deal.
"Exel's enhanced global footprint and Teijin's growth plans as an automotive composites solution provider can lead into mutual cooperation," stated Teijin Carbon America President Rob Klawonn in a news release.
"I look forward to exploring synergies between Exel and Teijin in various areas such as the transportation sector."