from plastic compounds and resins supplier A. Schulman, Ferro Corp. has agreed to sell substantially all of the assets in its specialty plastics business to A. Schulman for $91 million in cash.
Assets included in the transaction are Ferro's plastics manufacturing sites in Stryker, OH; Evansville and Plymouth, IN; Carpentersville, IL; and its plastics operations in Castellon, Spain. Specialty plastics assets not included in the sale are Ferro's liquid colorants and dispersions business in Edison, New Jersey, and its specialty plastics operations in Venezuela.
The company estimates that cash proceeds, net of cash taxes and fees, from the sale of the specialty plastics assets will be approximately $87 million, which it plans to use to reduce debt. The sale is subject to customary closing conditions, including consultation with workers' representatives. The transaction is expected to close early in the third quarter of 2014.
In addition, Ferro said it has launched a process to market its polymer additives business and has retained KeyBanc Capital Markets to advise on the transaction.
Peter Thomas, chairman, president and CEO of Ferro, said in a statement, "A major component of our value creation strategy is to harvest the value of assets that are no longer core to our growth strategy or are underperforming relative to our expected value creation metrics. Over the past 18 months, we have made significant progress on this objective, resulting in improved financial performance for the Company."
Thomas continued, "The actions we are announcing today illustrate our intention to focus resources on our performance Mmaterials product lines and to create a portfolio of higher-growth, value creating businesses. Our strategic vision is to become the premier global functional coatings and color solutions company, building on our core competencies in glass and color technologies. These divestitures will align our portfolio with that vision and provide liquidity for strategic growth activities. We are excited about the growth prospects associated with our core strategic platform and are actively pursuing multiple opportunities."
In 2013, the specialty plastics assets included in the transaction generated sales of $154 million while the polymer additives segment had 2013 sales of $293 million.
Back in March 2013, A. Schulman expressed its "strong intent" in pursuing the deal in a letter to Ferro on Feb. 13, 2013. Ferro's board rejected A. Schulman's offer and expressed their belief that the company should remain independent. A. Schulman first contacted Ferro in November 2012.