Baar, Switzerland -- Forbo Group, which makes floor coverings, adhesives, and belting, is selling its industrial adhesives activities, including synthetic polymers, to H.B. Fuller, for CHF 370 million ($396 million).
The transaction, which is subject to certain conditions, is expected to take place by March 2012. The sale does not include Forbo's building and construction adhesives unit.
"The addition of Forbo's industrial adhesives and synthetic polymers activities will significantly strengthen our market position worldwide and provide us with attractive growth opportunities over the long term," said Jim Owens, president and chief executive officer of H.B. Fuller.
Owens added that the deal "will create synergies through the purchase of raw materials, optimally complement each other from a geographic perspective - in particular in Europe and Asia - and will thus be able to generate added value for our customers around the world."
In fiscal 2010, Forbo said, its Bonding Systems division posted sales of CHF 606.6 million. The unit for sale accounts for CHF 499.3 million and building and construction adhesives for CHF 107.3 million).
The activities affected by the transaction have a headcount of around 1100 and will generate sales of about CHF 510 million in the 2011 business year, together with earnings (EBITDA) of roughly CHF 31 million.
The transaction makes H.B. Fuller one of the world's largest players in industrial adhesives. The St Paul, Minnesota-headquartered business is a leading providers of adhesives, sealants, coatings and other speciality chemicals. H.B. Fuller employs about 3300 people and in 2010 generated net revenue of $1360 million.
Among Forbo's adhesives offerings are water-based and high-modulus polyurethane types for automotive applications as well as adhesives for sandwich panel construction, including sprayable reactive hot melt polyurethane types.
Industrial adhesives are important in the assembled goods, packaging, textile, and automotive industries, noted Forbo, adding that synthetic polymers are sold to customers in the adhesives, coatings and construction industries.
Forbo said the rationale behind the sale is that Bonding Systems needed more competitive advantages and margin stability in a highly fragmented market: these are largely possible via the economies of scale, which H.B. Fuller can achieve.
The Swiss group also commented that it is currently looking at various strategic options for the building and construction adhesives, whose main markets are primarily in Benelux, Germany, and Eastern Europe including Russia. The unit has around 300 employees.
This E. Schneider, Forbo board member and ceo, explained that the group has invested in developing new adhesives technologies and introducing innovative and environmentally friendly applications. "We have adjusted our product portfolio, won new customer segments and international key customers as well as opened up new growth markets,' he said, blaming the market environment for the decision not to expand further alone, and to sell the adhesives business.