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[April 2001]
Cerdec to go to Ferro
OM Group Inc (Cleveland, OH, USA) announced on 24 April 2001 that it had reached an agreement to sell the electronic materials, performance pigments, glass systems and the Cerdec Ceramics divisions of dmc2 for 600 million euros in cash (approximately US$540 million) to Ferro Corporation. Annual sales for these businesses were approximately US$520 million in 2000 and earnings before interest, taxes, depreciation and amortisation was approximately US$58 million, excluding certain non-recurring items.
Ferro plans to finance the transaction with a new bank credit facility. The transaction is expected to close in the third quarter, subject to the necessary regulatory approvals (see end of next paragraph).
This coincided with the announcement from Degussa AG (Duesseldorf, Germany) that it had sold dmc2 to OM Group for 1.2 billion euros. This price included dmc2's financial debt amounting to approximately 0.6 billion euros. Including off-balance-sheet precious metal leases worth around 0.5 billion euros, the transaction size amounts to approximately 1.7 billion euros. An agreement to this end was entered into during the early morning of 24 April; this first deal is said, however, to be contingent on the consent by Degussa's Supervisory Board and receipt of competition clearance from the anti-trust authorities.
Following the sale to Ferro of Cerdec and the other parts of the business as detailed in the first paragraph, OM Group will own the metals management, automotive catalysts, fuel cells, precious metals chemistry, technical materials and jewellery, and the electroplating businesses of dmc2. For the fiscal year ended 31 December 2000, metals management revenues for the businesses that OM Group are retaining were US$5,289 million, while operating revenues were US$487 million. Operating profits amounted to US$55 million.
The dmc2 businesses to be acquired by Ferro are said by that company to be highly complementary to their existing core businesses and will generate significant synergies. The acquisition would accelerate the company's long-term strategic plan to expand geographically and to create a portfolio of businesses with a higher growth profile. It would also allow Ferro to achieve greater critical mass in several key businesses.
Hector Ortino, Chairman and CEO of Ferro, said: "This major acquisition is consistent with our strategic plan for growth and accelerates our execution of that plan in a number of ways. It helps us achieve our stated goal to build a core electronic materials business and builds on the TAM Ceramics and EMCA-Remex acquisitions made within the past two years".
Cerdec Ceramics is a major supplier of glaze and colours to the ceramic tile industry. This complements Ferro's position in supplying the ceramic market world-wide, especially in high-end decorative materials for the sanitary and dinnerware markets. The combination of these two businesses will, says Ferro, yield significant cost savings through a more efficient use of capacity and will be a significant cash flow generator. The acquisition will almost double the size of Ferro's ceramic tile and glaze business.
Before this acquisition, Ferro had operations in 19 countries and recorded sales of US$1.45 billion in 2000. Annual sales for Ferro next time round will now exceed US$2 billion.
ENDS