"Acquisitions are, and have long been, an important part of our growth strategy, and we are continually looking to generate shareholder value by identifying high-quality companies that will strategically enhance Nolato's existing business. We have been interested in GW Plastics for some time, and it's really pleasing to be completing this deal," said Nolato President and CEO Christer Wahlquist. "This acquisition provides us with significant volumes and a strong position on the key North American continent. It supports relationships with existing customers, while also creating additional opportunities for growth and expanding our customer base."
GW Plastics was founded in 1955 and has established a position as an industry leader specializing in complex injection-molded thermoplastic and silicone solutions with a significant degree of innovation and a high-tech standardized global manufacturing platform. The company's products are mainly used in medical devices and, to a lesser extent, in vehicle systems. The business has annual sales of approximately SEK 1.8 billion with an EBITA margin of around 7%. The acquisition price, including contingent consideration, is estimated to be approximately SEK 2 billion, around SEK 1.8 billion of which is to be paid upon transfer of ownership. Just over four-fifths of GW Plastics business will be reported under the Medical Solutions business area, with the remainder reported under Industrial Solutions.
GW Plastics, which is headquartered in Bethel, Vermont, has around 1,100 employees at its seven manufacturing plants in the U.S., Mexico, China, and Ireland. The company has been under the same ownership since 1983 and the current management will remain with the business. The company has a broad base of customers, the largest of which accounts for just over 20 percent of sales. GW Plastics has strong, longstanding customer relationships with a raft of market leaders across the globe, especially in the pharmaceutical, healthcare and automotive industries.
"GW Plastics is a well-managed, well-invested company that is a great fit with our corporate culture. The business, which has historically demonstrated healthy organic growth, has extensive know-how in engineering and technology. Together with its size and geographic presence, this provides an ideal strategic combination with Nolato and enables significant market synergies over time," said Wahlquist.
Following the requisite U.S. regulatory approvals, the transaction is expected to be completed in September, when the business will be consolidated into the Group, resulting in a marginal boost to Nolato's earnings per share for the current year. The interim report for the third quarter will provide a full acquisition analysis. The acquisition is being funded using own cash funds and new credit agreements.