Quaker Houghton announced last Thursday that it has agreed to acquire the operating divisions of Norman Hay plc, a private UK company that provides specialty chemicals, operating equipment, and services to industrial end markets, for a purchase price of GBP80 million (~USD98 million), subject to post-closing adjustments.
The divisions to be acquired are expected to have 2019 revenues of ~GBP63.5 million (~USD77.8 million) and adjusted EBITDA of ~GBP11.3 million(~USD13.8 million). The purchase price represents a multiple of ~7.1x of the divisions’ projected 2019 adjusted EBITDA and slightly increases Quaker Houghton’s leverage ratio (net debt to adjusted EBITDA) by 0.2x. Quaker Houghton continues to estimate its leverage ratio will be below 2.5x within two years.
The company is required to file for German regulatory approval and expects to receive this approval and close the transaction in October 2019.
Norman Hay plc serves a number of industries including aerospace, automotive, oil and gas, and power generation through four divisions:
- Ultraseal (~52% of revenues), a leading global provider of impregnation technology, including porosity sealants, and associated chemistry and equipment for die cast components;
- SIFCO ASC (~27% of revenues), a leading global provider of surface treatment solutions through selective electroplating, anodizing, chemical solutions and engineering solutions;
- Surface Technology (~11% of revenues), a specialty provider of surface treatment solutions including coatings, thermal sprays, plating and other ancillary services; and
- Norman Hay Engineering (~10% of revenues), a leading provider of design and engineering services that support surface treatment plants and equipment for the Ultraseal, SIFCO ASC and Surface Technology businesses as well as additional third-party industrial engineering applications.
The transaction is consistent with Quaker Houghton’s strategy to increase shareholder value through strategic “bolt-on” acquisitions that complement its existing business. Quaker Houghton intends to operate the acquired divisions as a stand-alone business within its Global Specialty Businesses platform while it completes the integration of Quaker Chemical and Houghton International.
“This acquisition represents an opportunity to add new technologies with good growth characteristics in attractive core market segments with high barriers to entry such as die casting, automotive OEM and aerospace. We also believe it provides a strategic opportunity to take advantage of external market trends such as the light-weighting of vehicles and 3D printing where we have the opportunity to leverage our global footprint and complementary geographic strengths. In addition, Norman Hay’s engineering expertise, which includes robotics applications, strengthens the existing equipment solutions platform inside Quaker Houghton and further positions the Company for Industry 4.0,” said Michael F. Barry, chairman, CEO, and president of Quaker Houghton.
Norman Hay plc was established in 1946 as a decorative electroplating business and has evolved into a global specialty chemicals sealant, surface coatings, and engineering group. The company is headquartered at its modern, state-of-the-art production facility in Coventry, England. The company has approximately 400 employees with production and R&D facilities across Europe and the United States.
Quaker Houghton is the global leader in industrial process fluids. Headquartered in Conshohocken, Pennsylvania, located near Philadelphia, in the United States, the company has a robust presence around the world, including operations in more than 25 countries.