Lydall to Acquire Interface Performance Materials
MANCHESTER, CT – August 9, 2018 – Lydall, Inc. (“Lydall” or the “Company”) (NYSE: LDL), today announced it has entered into an agreement to acquire Interface Performance Materials (“Interface”) for $265 million in cash. The transaction will further advance Lydall’s engineered materials offering in new markets with similar technologies utilized in our Performance Materials business. Interface is a leading globally-recognized brand that delivers complete sealing solutions with a comprehensive product portfolio, deep in-house technical capabilities and vertical integration. The transaction is expected to close in the Third Quarter of 2018, subject to the completion of specified closing conditions, including receipt of customary merger control approval from U.S. authorities.
A leader in the delivery of engineered sealing solutions, Interface partners with OEMs and Tier I manufacturers to serve both original equipment and aftermarket needs in segments such as Agriculture, Construction, Earthmoving, Industrial and Automotive. Headquartered in Lancaster, Pennsylvania, Interface supports its global sales with manufacturing sites in the U.S., Germany and India.
Interface’s reported sales and adjusted EBITDA for the fiscal year ended December 31, 2017 were $142 million and $26 million, respectively. The business is expected to achieve sales of approximately $150 million and adjusted EBITDA of approximately $29 million in the trailing 12 months ending August 31, 2018. Lydall expects to leverage its business efficiencies, operating discipline and economies of scale to generate an estimated annual cost savings of approximately $4 million by 2020.
The acquisition is expected to be accretive to Lydall’s earnings, net of the effects of purchase accounting approximately six months after closing. Lydall’s financial results for the Second Quarter 2018 included approximately $1.1 million of expenses related to this transaction, and it is estimated that approximately $3 million of additional non-recurring transaction and integration expenses will be incurred over the second half of 2018 and less than $1 million in 2019.
As a leader in fiber-based wetlaid production, Lydall will leverage manufacturing expertise with plans to optimize supporting functions throughout the business. The Interface business will become part of the Performance Materials operating segment with the expectation to complete integration within one year of closing.
The transaction is expected to be financed predominantly from borrowings under the Company’s amended credit facility; the provisions of which are being finalized with our banking partners.
Dale G. Barnhart, Lydall’s President and Chief Executive Officer, commented, “We are extremely excited about yet another transformational acquisition for Lydall. Interface Performance Materials expands our engineered materials portfolio with favorable margins while further shifting our concentration away from Automotive, which continues to be the focus of our long-term strategy. Interface is very well known in the industry for providing high-quality solutions and is uniquely positioned with deep in-house expertise for research, design, testing, production and fabrication.” Barnhart added, “Additionally, the culture, innovation and technology similarities between Interface and our legacy Performance Materials business create a complementary fit and provide opportunities for future growth. We look forward to welcoming Interface’s employees to the family once the deal closes.”
Victor Swint, President and CEO of Interface Performance Materials, commented, “I am proud of the company we have built and am excited that Interface will have the opportunity to achieve even greater success as part of Lydall. Lydall’s goals are well aligned with our core values, including commitment to integrity, performance and innovation, and with this transaction, we will continue to deliver best-in-class products and solutions.” Swint added, “This is a significant next chapter for Interface, and I am incredibly excited about our future with Lydall.”
Lydall, Inc. is a New York Stock Exchange listed company, headquartered in Manchester, Connecticut with global manufacturing operations producing specialty engineered products for the thermal/acoustical and filtration/separation markets. For more information, visit http://www.lydall.com.
For further information:
Vice President, Financial Planning and Investor Relations