H.B. Fuller Reveals $1.6B Acquisition for Royal Adhesives and Sealants
H.B. Fuller Company announced Monday its intent to acquire Royal Adhesives and Sealants in a $1.575 billion deal that, if approved, would make the combined company one of the world’s largest makers of specialty adhesives.
With Royal’s business, Vadnais Heights-based H.B. Fuller expects to improve its top line performance by $650 million, upping its total annual revenue to about $3 billion.
Based on figures gathered by trade publication ASI, the impact of the deal could make H.B. Fuller one of the 10 largest adhesives and sealants companies in the world by revenue. (The largest is Maplewood-based 3M.)
Royal, headquartered in northern Indiana, has 19 manufacturing factories in five countries and employs approximately 1,500 people globally. Chief among what H.B. Fuller looks to gain from Royal’s portfolio is its specialties making adhesives and sealants used for roofing and in the aerospace industry.
“Royal’s complementary offerings will expand our presence in North America, Europe and China, and add new technology and capabilities,” H.B. Fuller CEO Jim Owens said in a statement. “Upon closing the transaction, H.B. Fuller will be … focused on profitable growth in attractive engineering, durable assembly, and construction adhesives markets.”
H.B. Fuller’s business has shifted considerably since the start of the decade. In 2010, nearly half of its revenue came from sealants and adhesives used in the hygiene market and for packaging, while a third came from engineering and construction products. By 2020, it expects the engineering and construction side of its portfolio to make up nearly 60 percent of its revenue—or more than $1.8 billion of an estimated $3.2 billion—as its hygiene and packaging output shrinks to less than one-third of its overall business.
“This accretive acquisition accelerates realization of our 2020 strategic objective to focus and grow in engineering adhesives and other highly specified market segments,” Owens said, “while exceeding our targeted cash flow, [earnings per share] and EBITDA margin targets.”
Keeping with its financial goals, Owens noted the company had identified $35 million in cost savings and $15 million in growth savings that it expects to realize over the next three years.
The all-cash transaction is expected to close as early as next month.
Shares of H.B. Fuller rose 5 percent on Tuesday upon news of the acquisition.