A. Schulman, Inc. leading international supplier of high-performance plastic compounds, powders and resins, has executed a definitive agreement to acquire all of the issued and outstanding capital stock of privately held Citadel Plastics Holdings, Inc. (Citadel), a portfolio company of private equity firms HGGC and Charlesbank Capital Partners, for US$800 mln. Based in West Chicago, IL, Citadel is a leading North American specialty engineered plastics company that produces thermoset composites and thermoplastic compounds for specialty product applications spanning multiple industries including transportation, industrial & construction, consumer, electrical, energy and healthcare & safety.
The Company intends to fund the transaction with a new capital structure that will consist primarily of long-term debt and senior unsecured notes. The deal, which is subject to standard closing conditions, is expected to close in the third quarter of the Company's fiscal 2015. Due to the timing of the deal in relationship with A. Schulman's fiscal year end of August 31, it is not expected to be accretive in the Company's fiscal 2015, but is expected to be accretive in the first 12 months of ownership. The Company anticipates achieving approximately US$25 mln in synergies within 18 months of closing, driven primarily by sourcing activities and plant efficiency actions.
"Today's announcement marks a significant strategic milestone as we continue to transform the Company beyond plastic compounding into a premier specialty plastics organization," said Bernard Rzepka, president and chief executive officer of A. Schulman. "In early 2014, we communicated our Expanded Vision which defined target areas to drive growth for A. Schulman beyond our traditional space. Citadel provides us a unique opportunity to enhance our future growth paths for A. Schulman.
"Citadel enhances our thermoplastics platform and will create a more attractive and sustainable business by regionally extending our thermoplastic portfolio in areas such as flame retardants and thermoplastic blends," stated Rzepka. "Likewise, Citadel will expand our customer-centric service and product development capabilities. With significant revenue in the U.S., Citadel enhances our regional scale and efficiencies, as well as balances our current geographic footprint.
"Citadel provides a solid foundation in the composite business with a diverse set of capabilities to jumpstart our Expanded Vision initiative by adding a second growth platform to our organization with its industry-leading, added-value specialty thermoset composites business," added Rzepka. Established in 2007, Citadel has quickly become an industry leader in multiple attractive, niche applications, including: high performance auto structural, electrical power distribution, downhole oil & gas components, and medical patient transport systems. The company's expertise in material science enables it to deliver customized application-specific solutions with a wide range of performance properties, as well as an unmatched array of technical and formulation capabilities. The company has 1,200 employees and operates 21 manufacturing facilities throughout the world, including 10 thermoplastic facilities in the United States and Canada, and 11 thermoset composite plants comprising seven in North America, one in Germany, one in Brazil, and a joint venture consisting of two plants in China. "Their product offering not only enhances our existing portfolio, but presents attractive expansion opportunities in other fast-growing sectors such as aerospace, medical, LED lighting and oil & gas. Through this acquisition our portfolio becomes more highly specialized, which will enable us to better serve our customers," Rzepka said.