PolyOne Buying Spartech for $393m

Polymer compounder and distributor PolyOne plans to expand its product portfolio by acquiring Spartech, the firms have announced.

US-based Spartech brings a leading North American market position in sheet, rigid barrier packaging, compounds and specialty cast acrylic technologies to PolyOne.

PolyOne said the deal would be a bolt-on acquisition with opportunity for global expansion and allow the firm to align capacity and cost structure with customers. It would help Spartech shift away from high-volume products toward more value-added technologies.

The transaction is valued at about $393m (€302.9m), including assumption of Spartech's net debt of $142m (€109.5m). The companies expect to complete the deal in the first quarter of 2013.

Earlier this year, at an investory day event in New York, PolyOne said its goal is to have sales of $5bn (€3.9bn) and adjusted earnings per share of at least $2.50 (€1.93) by 2015. The sales goal is more than 70% higher than the $2.9bn (€2.2bn) total posted by PolyOne last year. The adjusted earnings-per-share target is more than double last year's $1.02 (€0.79).

PolyOne is the largest compounder in North America, according to Plastics News estimates, with an estimated market share in the region of 10-11%. Plastics News estimated the regional market in 2010 at $9.7bn (€7.5bn).

Spartech is the ninth largest film & sheet manufacturer in North America, according to Plastics News' most recent survey, with estimated relevant sales of $750m (€578.6m).

In the nine months that ended 4 August, Spartech reported earnings of nearly $3.3m (€2.5m) on sales of $862.6m (€665.6m).

"Spartech expands PolyOne's specialty portfolio with adjacent technologies in attractive end markets where we already participate as well as new ones like aerospace and security," said Stephen Newlin, chairman, president and CEO of PolyOne, in a statement.

"By combining Spartech's leading market positions in sheet, rigid barrier packaging and specialty cast acrylics with PolyOne's capabilities, we can accelerate growth for both companies," Newlin said. "We believe this is a very compelling transaction for our shareholders, customers and employees."

Separately, PolyOne reported that its net income in the third quarter rose 11%, to $24m (€18.5m) from $21.6m (€16.7m) in the third quarter of 2011.

Revenue edged up less than 1%, to $740.2m (€571.2m) from $735.8m (€567.8m).