PolyOne purchases Brazilian compounder, distributor for $21 million

PolyOne has acquired Brazilian compounder and distributor Uniplen Indústria de Polímeros Ltda. for an upfront cash purchase price of $21 million, marking its second acquisition in South America's largest market in the last three months.

Stephen D. Newlin, PolyOne's chairman, president, and CEO said the combination of Uniplen and the company's October 2010 acquisition of Polimaster "firmly establishes [PolyOne's] specialty product offering and overall customer service capabilities in Brazil." Uniplen had revenues of approximately $34 million in 2010; PolyOne recorded 2009 revenues of $2.1 billion.

Newlin said the acquisition gives it specialty engineered materials, color masterbatch, and distribution capabilities in Brazil, with locations in São Paulo, Santa Catharina, and Novo Hamburgo, in the Brazilian state of Rio Grande do Sul, to serve customers in end markets ranging from consumer, transportation, and appliance.

Robert M. Patterson, PolyOne's senior VP and CFO, said his company will continue to look for "bolt-on" acquisitions, targeting high growth regions such as Brazil, Asia, and the Middle East, as well as  in "attractive" end markets such as consumer and healthcare.

In October, PolyOne made its first acquisition in Brazil, buying the specialty color business, Polimaster. That company had $4 million in sales, with PolyOne noting that despite its small size, the acquisition would PolyOne "a starting presence in Brazil in attractive end markets, such as consumer and healthcare."

On the same day that PolyOne announced the acquisition, shares of its stock jumped nearly 11% after KeyBanc Capital markets upgraded its stock to "buy" from "hold", giving the company's shares a price target of $18. The stock got as high as $14.34 on Jan. 3. At market open on Jan. 4, PolyOne shares were at $14.10, with a press time price of $13.75.

Michael Sisone, KeyBanc analyst, said in an Associated Press article regarding the stock price jump that, "We believe (PolyOne's) restructuring efforts are largely complete and a growth phase is on the horizon." Sisone forecast earnings per share growth in the mid to high teens over the next few years.

PolyOne's third-quarter 2010 revenues were up 24% over the third quarter of 2009, with record operating income from its combined three strategic platforms. Excluding special items and one-time tax adjustments, earnings per share came in at $0.28.