H.B. Fuller Announces Agreement to Acquire Royal Adhesives & Sealants

H.B. Fuller Announces Agreement to Acquire Royal Adhesives & Sealants
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www.royaladhesives.com
$1.575 billion acquisition expected to create significant shareholder value while enhancing 2020 plan.

H.B. Fuller Company announced that it has signed an agreement to purchase Royal Adhesives & Sealants, a leading manufacturer of high-value specialty adhesives and sealants.

This business consistently delivers industry-leading growth rates, EBITDA margins, and free cash flow that are expected to enhance H.B. Fuller’s position as a global leader in the adhesives industry.

“This accretive acquisition accelerates realization of our 2020 strategic objective to focus and grow in engineering adhesives and other highly specified market segments, while exceeding our targeted cash flow, EPS and EBITDA margin targets,” says H.B. Fuller President and Chief Executive Officer Jim Owens.

“With Royal’s strong customer relationships and experienced team, we will add depth and breadth to our portfolio. Royal’s complementary offerings will expand our presence in North America, Europe and China, and add new technology and capabilities. We have identified $35 million in cost synergies and $15 million in growth synergies that we expect to realize over the next three years as a result of merging these two great adhesives businesses. Upon closing the transaction, H.B. Fuller will be a company with nearly $2.9 billion in revenue, focused on profitable growth in attractive engineering, durable assembly, and construction adhesives markets.”

Royal is expected to generate approximately $650 million in revenue and $138 million in adjusted EBITDA for H.B. Fuller’s fiscal year 2017. The company operates 19 manufacturing facilities in 5 countries, and employs approximately 1,500 people globally.

The agreed upon purchase price is $1,575 million, subject to customary adjustments. H.B. Fuller intends to finance the transaction through new debt financing.

H.B. Fuller has previously announced specific financial goals for organic growth, cash flow and EBITDA margin improvement in the company’s 2020 strategic plan and believes this acquisition will support acceleration and over performance relative to these objectives.

Royal is a highly respected supplier of industrial adhesives in a diverse set of end markets, including aerospace, transportation, commercial roofing, insulating glass, solar, packaging and flooring applications.

With this acquisition, H.B. Fuller will gain product technology and add people and skills that will result in a more capable and dynamic company for customers and employees. H.B. Fuller remains committed to maintaining its current dividend and rapid deleveraging using the significant free cash flow it expects to have available for this purpose.

Subject to customary closing conditions and regulatory approvals, the transaction is expected to close as soon as October of 2017. Morgan Stanley & Co. LLC is acting as H.B. Fuller’s sole financial advisor in relation to this acquisition, and Faegre Baker Daniels LLP is acting as H.B. Fuller’s legal counsel. H.B. Fuller is acquiring Royal from affiliates of American Securities LLC, based in New York with an office in Shanghai.

Royal - H.B. Fuller Investment Presentation

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