As it continues to transform itself from a plastics compounder to a “premier specialty plastics organisation”, US plastics compounder and distributor A. Schulman (Akron, Ohio; www.aschulman.com) on 16 March signed a definite agreement to acquire all of the shares in composites specialist Citadel Plastics (West Chicago, Illinois / USA; www.citadelplastics.com). The USD 800m deal is expected to be completed in A. Schulman’s fiscal third quarter, pending standard closing conditions. Since the Akron-based company’s financial year ends on 31 August, the acquisition is only expected to be accretive to its 2016 financials. The purchase is to be funded by means of long-term debt and senior unsecured noted.

A. Schulman said it expects USD 25m in synergies within 18 months of closing, mostly as a result of sourcing activities as well as what it called “plant efficiency actions”. Founded in 2007, Citadel produces thermoset composites and compounds for speciality applications, including for the transportation, industrial, construction, consumer, E&E and healthcare segments. The company has 1,200 employees and operates 21 global manufacturing facilities in the US, Canada, Germany, Brazil and China. Earlier this year, it set up a BMC joint venture with electro-magnetic interference (EMI) shielding and plastics specialist EMEI Group (Shatin, New Territories / Hong Kong; www.emeigroup.com) – see Plasteurope.com of 26.01.2015. Sellers are private equity firms HGGC (Palo Alto, California / USA; www.hggc.com) and Charlesbank Capital Partners (Boston, Massachusetts / USA; www.charlesbank.com).

Commenting on the acquisition, A. Schulman CEO Bernard Rzepka said, “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 organisation with its industry-leading, added-value specialty thermoset composites business.” Specifically, the purchase will regionally extend A. Schulman’s thermoplastics portfolio by adding flame retardants and thermoplastic blends, and will also afford it a more balanced geographic footprint since most of Citadel’s revenue is generated in the US. A. Schulman’s Q1 net sales in EMEA came to USD 371.2m, while its Americas business’ net sales for the same period amounted to USD 190.9m – for more details, see Plasteurope.com of 12.01.2015. Citadel’s pro forma revenue for 2014 came to about USD 525m, at an EBITDA of about USD 75m.

The deal – which Rzepka said will not only enhance his company’s existing portfolio but also afford growth potential in the aerospace, medical, LED lighting and oil & gas markets – is part of A. Schulman’s Expanded Vision strategy, launched in early 2014. Since 2010, the US compounder has been actively engaged in growing through acquisitions, and has made a total of 10 purchases and set up three joint ventures – all of which contributed 30% of sales and about 40% of adjusted operating income to its fiscal 2014 results.