Less than two weeks after announcing a new strategy to grow via acquisition, Myers Industries Inc. made good on the promise by buying one of the largest rotational molders in North America.
Akron, Ohio-based Myers Industries announced Nov. 10 that it has acquired the assets of South Bend, Ind.-based Elkhart Plastics Inc. for $62.5 million.
The combination of Elkhart with Myers' Ameri-Kart business will create the fifth-largest U.S. rotomolder, according to Myers officials.
Myers President and CEO Mike McGaugh said the purchase fits well into the publicly traded company's new strategic plan, which it announced on Oct. 29.
"As a bolt-on acquisition within our existing technology space, Elkhart fits perfectly into this plan and helps us take a meaningful step toward our long-term vision," McGaugh said in a news release.
McGaugh, a longtime Dow Chemical Co. executive, joined Myers in March. He said last month that Myers will acquire plastics molding companies with a goal of reaching a run rate of $1 billion in annual sales by the end of 2023.
At the time, he said potential acquisition targets included manufacturers of bulky rotationally molded and blow molded products.
Founded in 1988, Elkhart molds engineered products for the recreational vehicle, marine, agriculture, construction, truck, and other industries.
Elkhart will become a new strategic business unit within Myers' Material Handling Segment.
Elkhart Plastics was founded in 1988 and has six U.S. manufacturing facilities — three are in Indiana — and it employs about 460 people. Elkhart posted 2019 sales of $102.1 million, and Myers reported that its earnings before interest, taxes, depreciation and amortization (EBITDA) margin was approximately 9 percent, based on its unaudited, reviewed financial statements. Myers financed the transaction with cash on hand.
"We are excited to welcome Elkhart, its president, Jack Welter, and the entire Elkhart team to the Myers family," McGaugh said.
Myers officials expect the transaction to generate annual cost synergies of approximately $4 million to $6 million per year, mostly in the first two years, through operational changes and supply chain optimization.
"We are proud of Elkhart's long history as a leader in the rotomolding industry, and we look forward to the new opportunities the combination with Myers will bring for our customers, employees and all of our stakeholders," Welter said in the release. "We are a good cultural fit with Myers, and we expect a smooth and successful integration of our organizations."
Plastics News ranks Myers Industries' Ameri-Kart Corp. as the No. 8 rotomolder in North America, with estimated sales of $56 million.