Ferro Corp. (FOE) Acquires Cappelle Pigments, Certain Delta Performance Products Assets

October 17, 2016 9:27 AM EDT
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Ferro Corporation (NYSE: FOE):

  • Estimated 2016 Sales for the Two Businesses of Approximately $76 Million
    • Cappelle Pigments is a Leader in High-Performance Specialty Pigments
    • Acquisition of Assets of Delta Performance Products Adds Customized Colorant Blends for Concrete and Other Hardscapes
  • The Transactions Will Enhance Ferro’s Position as a Leading Color Solutions Provider
    • Increase Ferro’s Pigments, Powders and Oxides (“PPO”) business by approximately 30%, to approximately $315 million
    • Complement Ferro’s current inorganic pigments portfolio
    • Facilitate Ferro’s expansion into high-performance, specialty organic pigment market

Ferro Corporation (NYSE: FOE “Company”) today announced entering into an agreement to acquire Cappelle Pigments NV (“Cappelle Pigments”) and the acquisition of certain assets of Delta Performance Products (“Delta”), for aggregate consideration of approximately $60 million.

Sales for the two businesses in 2016 are estimated to be approximately $76 million in the aggregate and adjusted EBITDA in 2016 is expected to be approximately $11 million. Based on estimated 2016 adjusted EBITDA, excluding expected synergies, the purchase price of the two businesses represents a combined transaction multiple of approximately 5.6X.

Cappelle Pigments:

On October 14, 2016, Ferro signed a definitive agreement to acquire 100% of the stock of Belgium-based Cappelle Pigments for €50.5 million (approximately $56 million) on a cash-free and debt-free basis. The transaction is expected to close by year end, subject to customary closing conditions, including regulatory review.

Cappelle is a 125-year-old, privately held company that produces specialty, high-performance inorganic and organic pigments used in coatings, inks and plastics and sells its products in more than 75 countries. Cappelle specializes in weather-, heat-, and light-resistant organic pigments. The company is also a market leader in certain inorganic pigments that complement Ferro’s market leadership positions in Complex Inorganic Colored Pigments (“CICPs”) and Ultramarine Blue pigments.


On August 1, 2016, Ferro purchased certain assets of Delta Performance Products. This business produces customized colorant blends that utilize Ferro’s CICPs for the concrete and outdoor hardscape markets.

Peter Thomas, Chairman, President and CEO of Ferro Corporation, said, “These acquisitions are great additions to our growing Pigments business. Both fit extremely well into the strategy for our color solutions businesses, and we are excited about the opportunities these assets present to enhance shareholder value. Over the next 12 to 24 months, between the two businesses, we expect to realize commercial and operating synergies of $3 million to $4 million.

These acquisitions are much like the Nubiola acquisition we made last year. They both increase the breadth of options we can offer our customers, increase our technical capabilities and enhance our market position. The transactions will increase Ferro’s PPO business by approximately 30% and expand our addressable market for pigments by a factor or four, to approximately $4 billion. The addition of Cappelle’s proprietary pigments and capabilities will advance our expansion into the specialty organic pigment market and round out our product portfolio. The Delta transaction enhances our position as a manufacturer of engineered colorants and custom blends.”

Mr. Thomas concluded, “These businesses demonstrate the value proposition of our Pigments business. We create value for our customers by combining and manipulating pigments to produce specialized color solutions that provide functional attributes for our customers’ end products, or improve the effectiveness and efficiency of their supply chain and manufacturing processes.”

Adjusted Earnings Before Interest, Taxes and Depreciation (“EBITDA”)

Adjusted EBITDA for the transactions excludes the impact of certain items, primarily associated with purchase accounting adjustments, transaction-related expenses and acquisition integration costs, restructuring activities, gains and losses on asset sales concluded by the companies being acquired, and other adjustments to harmonize their accounting results to our standard accounting practices. The impact of adjusting for these items cannot be determined as one of the transactions has not been completed and 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 occurred yet. Therefore, the Company is unable to reconcile the full-year 2016 adjusted EBITDA guidance for the acquisitions.

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