Ferro Announces Acquisition to Further Strengthen Its Position in Fast-Growing Turkey Market
By Business Wire News
By Business Wire News
Ferro Corporation (NYSE: FOE, “Company”) announced today that it has purchased 100% of the equity of privately held Istanbul-based Ferer Dis Ticaret Ve Kimyasallar Anonim Sirketi A.S. (“Ferer”) for approximately $9.0 million in cash, on a cash-free and debt-free basis, subject to working capital and other adjustments. The transaction will be funded with excess cash and a draw on the Company’s revolving credit facility.
The acquisition of Ferer is the third step Ferro has taken in the past 18 months to strengthen its position in the fast-growing Turkey market. In July 2014, Ferro acquired assets of a reseller of Ferro porcelain enamel products in Turkey, providing a commercial base for direct marketing and sales opportunities. In November 2015, Ferro completed the acquisition of Egypt-based tile coatings manufacturer Al Salomi for Frit and Glazes, adding production capacity to meet current and future demand in Turkey as well as other markets in the Middle East and North Africa. Now, the Ferer acquisition brings Ferro an operational presence in Turkey focused on the glass market.
Ferer is a distributor in Turkey of Ferro color and glass coating products and also provides customized, blended products and technical support primarily for the glass industry. Ferer’s primary focus is on servicing manufacturers of automotive, flat and container glasses as well as non-tile ceramic applications, including dinnerware, stoneware and porcelain. Ferer also distributes pigments into the paint and plastics industries. Among other activities, Ferer provides local operational capabilities to produce and distribute customized paste and powder products from intermediates supplied by Ferro. Ferer recently opened a new blending, mixing and pasting plant that is expected to significantly expand production and distribution capabilities.
Ferro estimates that in 2016 the acquisition will generate incremental sales of approximately $3 million and incremental adjusted EBITDA of approximately $2.0 million.
Commenting on the proposed transaction, Peter Thomas, Chairman, President and CEO of Ferro Corporation, said, “The acquisition of Ferer advances our strategy to invest in higher-growth opportunities and to expand sales in this fast-growing region. The acquisition adds to our existing presence in Turkey and enables us to serve our customers more directly and effectively. The new Ferer plant expands our capabilities to produce customized products and color solutions and will serve as a platform to build a broader marketing and customer support infrastructure.”
Mr. Thomas concluded, “The Ferer management team have been valued partners of Ferro over the past 17 years. They have built a company that is well known and respected in the glass market in Turkey. We look forward to working with the Ferer team to build on that foundation and to accelerate our growth in the region.”
About Ferro Corporation
Ferro Corporation (http://www.ferro.com) is a leading global supplier of 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 4,740 employees globally and reported 2014 sales of $1.1 billion.
Ferer (http://www2.ferer.com.tr) was as established in 1998 as Ferro’s agent for its Performance Colors and Glass business. Ferer markets an extensive variety of colorants and glass coating products for the flat glass, automotive glass, container glass, dinnerware, and paint and plastics pigments industries. Ferer’s main administrative office is in Istanbul. It has a laboratory, warehouse, and a new blending and mixing plant in Kütahya.
Cautionary Note on Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of Federal securities laws. These statements are subject to a variety of uncertainties, unknown risks, and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following:
- Ferro’s ability to integrate the Ferer acquisition and generate the anticipated EBITDA;
- Ferro’s ability to effectively integrate acquisitions, including Ferer, and achieve the expected synergies, as well as the acquisition being accretive and Ferro achieving the expected return on invested capital;
- Ferro’s ability to successfully introduce new products or enter into new growth markets;
- Demand in the industries into which Ferro sells its products may be unpredictable, cyclical, or heavily influenced by consumer spending;
- Ferro’s ability to successfully implement and/or administer its cost-saving initiatives, including its restructuring programs, and to produce the desired results;
- currency conversion rates and economic, social, regulatory, and political conditions around the world;
- restrictive covenants in the Company’s credit facilities could affect its strategic initiatives and liquidity;
- Ferro’s ability to access capital markets, borrowings, or financial transactions;
- the effectiveness of the Company’s efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;
- the impact of interruption, damage to, failure, or compromise of the Company’s information systems;
- the availability of reliable sources of energy and raw materials at a reasonable cost;
- Ferro’s presence in certain geographic regions, including Latin America and Asia-Pacific, where it can be difficult to compete lawfully;
- increasingly aggressive domestic and foreign governmental regulations on hazardous materials and regulations affecting health, safety and the environment;
- sale of products into highly regulated industries;
- limited or no redundancy for certain of the Company’s manufacturing facilities and possible interruption of operations at those facilities;
- competitive factors, including intense price competition;
- Ferro’s ability to protect its intellectual property or to successfully resolve claims of infringement brought against it;
- the impact of operating hazards and investments made in order to meet stringent environmental, health and safety regulations;
- management of Ferro’s general and administrative expenses;
- Ferro’s multi-jurisdictional tax structure;
- the impact of the Company’s performance on its ability to utilize significant deferred tax assets;
- the effectiveness of strategies to increase Ferro’s return on invested capital, and the short-term impact acquisitions may have on return on invested capital;
- stringent labor and employment laws and relationships with the Company’s employees;
- the impact of requirements to fund employee benefit costs, especially post-retirement costs;
- implementation of new business processes and information systems, including the outsourcing functions to third parties;
- exposure to lawsuits in the normal course of business;
- risks and uncertainties associated with intangible assets;
- Ferro’s borrowing costs could be affected adversely by interest rate increases;
- liens on the Company’s assets by its lenders affect its ability to dispose of property and businesses;
- Ferro may not pay dividends on its common stock in the foreseeable future; and
- other factors affecting the Company’s business that are beyond its control, including disasters, accidents and governmental actions.
The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition and results of operations.
This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this release. Additional information regarding these risks can be found in our Annual Report on Form 10-K for the period ended December 31, 2014.
John Bingle, 216-875-5411
Treasurer and Director of Investor Relations
Mary Abood, 216-875-5401
Director, Corporate Communications