Lydall (LDL) to Acquire Gutsche for $58M

Lydall, Inc. (NYSE: LDL) announced that it has entered into an agreement to acquire MGF Gutsche GmbH & Co. KG (Gutsche) for approximately $58 million in cash. The transaction will further position Lydall as a global leader in needle punch nonwoven filtration solutions and strengthen the Company’s position as a premier provider of engineered technical materials. The acquisition will expand the Company’s filtration product offerings into attractive adjacencies and diversify the Company's geographic revenue base. The transaction is expected to close at year end, subject to receipt of customary merger control approval from German competition authorities and the completion of specified closing conditions.

Gutsche is a leading producer of nonwoven needle punch materials serving the industrial filtration and high performance nonwoven segments. The business consists of operations in Germany and China.

Gutsche’s fiscal year ends on December 31, 2016 and revenue and EBITDA are forecasted by Gutsche to be approximately $50 million and $6 million, respectively. Lydall expects the business to be fully integrated by the end of 2019. Lydall expects to leverage its operating discipline, business efficiencies, and economies of scale to generate annual cost savings of approximately $3 million.

The acquisition will be integrated into Lydall’s Technical Nonwovens segment. The Company plans to maintain manufacturing presence in the UK, Europe, and China and, through restructuring initiatives, to increase efficiencies and unlock operational synergies. The acquisition will be dilutive to Lydall’s earnings in 2017 on an all-in basis, which includes the effect of purchase accounting, restructuring and other non-recurring expenses. The acquisition is expected to be accretive to Lydall’s earnings by mid-2018.

The transaction is expected to be financed through a combination of cash on hand and borrowings from the Company’s revolving credit facility.

Dale G. Barnhart, Lydall’s President and Chief Executive Officer, stated, “The acquisition of Gutsche is very appealing as it combines two complementary companies in the industrial filtration and technical materials markets. With the addition of Gutsche, we gain an experienced management team and an attractive footprint to serve Europe as well as secure a strong filtration position in the fast growing waste-to-energy incineration market. In addition, we are able to complement our China-based sales with a focus on the greater Asia-Pacific export markets. Gutsche is a well-known leading brand in the industry with an excellent reputation for high quality products and a proven culture of innovation. We look forward to welcoming their employees to the Lydall family.”

Michael Gutsche, Chief Executive Officer of Gutsche, commented, “I am very excited for Gutsche to become a part of the growing Lydall organization. We have found the ideal partner that shares our passion for delivering the most advanced and highest quality products in the industry. Our combined focus on profitable growth and the complementary nature of markets we serve will only further strengthen the excellent relationships we have with our suppliers and customers.”

Conference Call and Webcast

Lydall will host a conference call on November 30, 2016 at 2:00 p.m. ET to discuss this announcement. Pre-registration for this call, as well as a live webcast can be found at the Company’s website www.lydall.com under the Investor Relations section. The call may be accessed at (888) 338-7142, from within the U.S., or (412) 902-4181, internationally. A recording of the call will be available from 4:00 p.m. ET on November 30, 2016 through 11:59 pm ET on December 7, 2016 at (877) 344-7529 from within the U.S., or (412) 317-0088, internationally, passcode 10097317. Also, additional information, including a presentation supporting the conference call, can be found on the Company's website www.lydall.com under the Investor Relations section.

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