Ferro Corporation (NYSE:FOE) today announced that it has acquired Electro-Science Laboratories, Inc. (“ESL”), a leader in electronic packaging materials. Ferro paid $75 million excluding customary adjustments and fees for the privately held company headquartered in King of Prussia, Pennsylvania.
Full-year 2016 adjusted EBITDA is expected to be $9.2 million, suggesting a transaction multiple, excluding synergies, of 8.2x. Ferro expects synergies in excess of $10 million, with $6 million realized within the first three years of operation. The Company expects the transaction to be accretive to earnings in year one.
The acquisition of ESL enhances Ferro’s position in the electronic packaging materials space with complementary products, and offers an attractive platform for growth in Ferro’s Performance Colors and Glass business unit.
ESL produces thick-film pastes and ceramic tape systems that enable important functionality in a wide variety of industrial and consumer applications. Its key products are used to build hybrid integrated circuits, modules and sensors that function in harsh conditions. Hybrid integrated circuits using ESL products are used in aerospace and defense applications, such as satellites. The modules and sensors are used in automobile components, including oxygen sensors. ESL products in heat sensors are used in appliances such as ovens and water heaters. ESL paste
systems for heaters are used on a wide variety of substrates, including metal, ceramic and glass. ESL was founded in 1962 and has remained privately owned and associated with the founding family. The business has operations in the United States and United Kingdom and has 86 employees.
Peter Thomas, Chairman, President and CEO of Ferro Corporation, said, “This acquisition gives Ferro a more significant share of the addressable market for electronic packaging materials, and is highly synergistic within our current Ferro business. While ESL and Ferro both employ similar manufacturing processes, the product portfolios, end use applications and customers are complementary. In addition, Ferro is backward integrated into glass production, which will provide raw material synergy opportunities. ESL is aligned with our asset-light and heavy-touch operating philosophy and our commitment to adding value for our niche market customers across the globe. ESL is a recognized leader in a market that is expected to continue to grow as a result of increasing everyday use of electronics and sensors within our homes, vehicles and offices.”
“The ESL transaction — the fifth acquisition by Ferro in 2016 – is the first significant acquisition in our Performance Color and Glass segment, and we are actively reviewing other opportunities in this space,” continued Mr. Thomas. “We are making acquisitions across all of our businesses to enhance our capabilities, expand our product portfolio and drive new opportunities for growth.”
About Adjusted EBITDA Guidance
Adjusted EBITDA excludes the impact of certain items that are not expected to recur. Ferro is unable to reconcile ESL’s adjusted EBITDA for full-year 2016 without unreasonable effort. It is not possible at this time to identify the potential amount or significance of these items for the balance of the year, as they have not yet occurred.
About Ferro Corporation
Ferro Corporation (http://www.ferro.com) is a leading global functional coatings and color solutions company that supplies technology-based performance materials, including glass-based coatings, pigments and colors, and polishing materials. Ferro products are sold into the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Headquartered in Mayfield Heights, Ohio, the Company has approximately 4,900 employees globally and reported 2015 sales of $1.1 billion.
About Electro-Science Laboratories, Inc.
ESL (www.electroscience.com) manufactures screen-printable pastes such as thick-film paste conductors, dielectrics and resistors (also known as thick-film inks, paints or coatings), ceramic tape systems, and fired parts such as porous alumina and zirconia cover plates, solid oxide fuel cell substrates, multi-electrode arrays, and both anode-supported and electrolyte-supported fuel cells. These advanced materials find application in hybrid microcircuits and multilayer microelectronics, electronic components such as inductors, capacitors and transformers, heaters on steel or other substrates, plus low and high temperature co-fired ceramics (LTCC and HTCC). ESL delivers on-time, low-cost, high-reliability, stable and reproducible materials in an ISO 9001:2008 environment, scaling up from laboratory and pilot-scale quantities to high-volume production.
