SWM Acquires Tekra and Trient

SWM  announced the signing of a definitive agreement to acquire Tekra, LLC and Trient, LLC (“Tekra and Trient”), converters of high-performance films and substrates, significantly enhancing the Company’s films capabilities. Tekra and Trient currently operate as divisions of EIS and are based in the Milwaukee, Wisconsin area. The purchase price is $155 million in cash (subject to certain customary closing adjustments) and the transaction is expected to close before March 31, 2020.

Tekra and Trient Highlights:

• Deep expertise in technical films converting, bringing new capabilities to SWM’s AMS segment
• Key end-markets include medical, graphics, electronics, and automotive, bolstering several existing SWM market presences, creating access to new customers, and opening opportunities to provide additional solutions to existing customers
• Approximately $100 million of sales with annual growth projected in the 3% - 4% range, EBITDA margin approximately 16%

SWM CEO Dr. Jeffrey Kramer, “Tekra and Trient are strategic additions to our AMS growth platform and these businesses complement many of the key attributes that are the foundation of SWM. Tekra and Trient provide critical components for their customers’ end products that meet demanding technical requirements. Much like SWM, their focus is on high-value applications and maintaining close customer relationships that drive market leadership and strong financial performance.”

“The conversion capabilities that these two businesses provide will allow SWM to expand its suite of offerings in key industries, including medical, graphics, electronics, and automotive. Additionally, since we participate in many of the end-markets Tekra and Trient serve, these expanded offerings provide an array of long-term top-line synergy opportunities with our AMS business. We see potential to leverage the favorable long-term growth trends in specialty areas like medical diagnostic testing and high-end graphics materials and cross-sell both products and converting services across our customer base. We also see opportunities to accelerate innovation and leverage our global assets to build out an increased international presence for these businesses.”

“This transaction will represent our fourth key acquisition since we formed the AMS segment in 2013 and will accelerate the segment towards $600 million of annual sales. Since completing our last acquisition in 2017 we have fully integrated our organization, including significant IT investments, and delivered on synergies and organic growth plans for the segment. Tekra and Trient are high-quality assets, ideal strategic fits, and their people are well-regarded as technical and service leaders within their industries. We look forward to welcoming the talented individuals from these organizations who will become part of SWM and our growing AMS segment.”

Carl Sommerstad, General Manager of both Tekra and Trient, commented “The leadership teams at Tekra and Trient are excited to join SWM. With similar cultures, operating strategies, and focus of on delivering customer value, we expect a seamless transition and are confident we will see continued growth together.”

Transaction & Financial Highlights

• The transaction is expected to be accretive to 2020 Adjusted EPS; guidance for 2020 Adjusted EPS and this acquisition’s financial impact will be detailed in the Company’s upcoming fourth quarter earnings release on February 20th, 2020.
• During 2020, the company expects to incur approximately $2 million of transaction and integration expenses; purchase accounting expenses will be determined after the close of the transaction. Consistent with prior transactions, Adjusted EPS will exclude purchase accounting expenses, but include integration and transaction expenses.
• The transaction’s $155 million purchase price is expected to be funded with the Company's existing credit facility. At close, pro forma net debt to EBITDA per the terms of the credit facility is expected to be approximately 2.7x and is expected to return toward the low 2x range over the next two years, absent further transactions. The Company believes it has ample liquidity to continue an active M&A strategy.

Source: SWM

The preceding press release was provided by a company unaffiliated with Wide-Format Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of Wide-Format Impressions.