A. Schulman to ‘jumpstart growth initiative’ with $800m Citadel acquisition
Citadel, based in Chicago, is a North American plastics company that produces thermoset composites and thermoplastic compounds for specialty product applications.
Flame retardants and thermoplastic blends
The acquisition will complement A. Schulman’s thermoplastics platform and expand its portfolio in flame retardants and thermoplastic blends.
Bernard Rzepka, president/CEO, A. Schulman, said with Citadel its thermoplastics business will have a ‘more balanced geographical footprint’, and it will add a second growth platform to the organization, Citadel’s high margin thermoset composites business to expand its product development.
“We are very pleased to announce we have signed a definitive agreement to acquire Citadel,” said Rzepka.
“The company has 21 facilities located in the US but also plants in Canada, Mexico, Brazil and China.
“Citadel has quickly become a market leader in many attractive niche applications, the company’s expertise in plastic materials enable it to deliver customized specific solutions with a wide range of performance properties.
"On the thermoplastics side Citadel will help us to create a more defensible and sustainable platform primarily in North America and enhances our overall capabilities and enables us to access new end user markets.”
Aggressively grow in key geographical regions
Rzepka said it was impressed with the Citadel team because it has an extensive track record of innovation.
“Over the years the company has developed more than 7,000 formulations, over 1,000 active products, totalling over $5m in potential annual revenue,” he added.
“Since 2010, A. Schulman wants to aggressively grow in key geographical regions, we have successfully completed 10 acquisitions and three joint ventures which contributed to 30% of sales in 2014.
“We shared our expanded vision with our investors earlier this year, which defined target areas for growth beyond our traditional space, and as part of this transaction we have an opportunity to jumpstart this growth initiative while positioning the company to achieve its 2018 financial targets.
Expansion opportunities
“We look forward to welcoming 1,200 associates from Citadel to the A. Schulman team.”
In 2014, Citadel had approximately $525m of pro-forma and pro-forma earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately $75m.
The company intends to fund the transaction with a new capital structure that will consist primarily of long-term debt and senior unsecured notes.
Rzepka said the acquisition will also present attractive expansion opportunities in other fast-growing sectors such as aerospace, medical, LED lighting and oil and gas.
A. Schulman, based in Ohio, supplies plastic compounds and resins to markets including packaging, mobility, building and construction. The Company employs approximately 3,900 people and has 42 manufacturing facilities globally. It reported net sales of approximately $2.5bn for the fiscal year ended August 31, 2014.
