Ferro Corporation announced it has entered into a definitive agreement to sell its Tile Coatings Business to Pigments Spain, S.L., a company of the Esmalglass-Itaca-Fritta group, which is a portfolio company of Lone Star Funds.
The deal was for $460 million in cash, with the potential for an additional $32 million in cash based on the performance of the business pre-closing, subject to customary adjustments.
The completion of the sale is subject to the receipt of regulatory approvals and the satisfaction or waiver of other customary closing conditions.
With annual sales of approximately $510 million for the twelve months ended September 30, 2019, Ferro’s Tile Coatings Business produces coatings for ceramic tiles used in residential and non-residential construction. Historically, it has been part of the Company’s Performance Coatings reporting segment, along with Ferro’s Porcelain Enamel Business, which will be retained.
“This transaction will substantially advance the Dynamic Innovation and Optimization phase of our strategy and strengthen our balance sheet,” said Peter Thomas, Chairman, President and CEO of Ferro Corporation. “The transaction also will reduce our manufacturing footprint and end-market exposure in Europe, optimizing our portfolio with more equal balance between Europe and the rest of world and with less exposure to commercial and residential construction markets.”
Mr. Thomas added that the net proceeds from the sale principally will be used to pay down debt.
In accordance with US Generally Accepted Accounting Principles, the Company expects the Tile Coatings Business will be classified as “held for sale” and reported as discontinued operations.
Lazard is acting as financial advisor and Jones Day is serving as legal counsel to Ferro on the transaction. The Company expects to discuss additional details of the transaction during its fourth quarter 2019 earnings conference call.
Esmalglass-Itaca-Fritta group, based in Villarreal, Spain, is a manufacturer of colors and glazes for the ceramic sector with an approximate turnover of 470 million euros in 2018.
Source: Ferro Corporation