Greenville, South Carolina - JPS Industries Inc. is to buy Hexcel's reinforcements business - including its Anderson, South Carolina and Statesville, North Carolina operations - for $62.5 million.
JPS will also pay a contingency fee of up to $12.5 million, based on revenues from sales of ballistics products from those facilities over the next three years, a 21 June statement said.
The Hexcel reinforcements units cover fibreglass based electronics and speciality industrial substrates businesses, as well as aramid-based ballistics substrates.
Greenville, South Carolina-based JPS Industries makes extruded urethanes, polypropylenes and mechanically formed glass substrates for speciality industrial uses.
"This transaction represents a landmark event in the history of JPS Industries and an opportunity to provide significant value to JPS, its customers and its stockholders," said Michael Fulbright, chairman and ceo of JPS.
"We believe that Hexcel's employees, facilities, and product lines complement our existing operations quite well and adding these resources into our existing business will create a much stronger operating entity.
Fulbright said the deal provides the JPS Composite Materials business, led by president Gary Wallace, with "significant resources to grow and better serve our existing markets and customers." It adds "larger, more flexible manufacturing capabilities, stronger R&D efforts across all product lines and, importantly, gives us entry to several new markets," the chairman continued.
The company said that JPS Composites' expanded customers and markets will span "many industries and speciality uses" including: electronics such as printed circuit boards; communication devices and internet infrastructure components; aerospace components in military and commercial applications; speciality substrates for commercial and residential construction.
Another important use is in "ballistics materials used in soft body armour for civilian and military applications," Fulbright said.
The deal will be financed with a $105 million senior and second lien credit facility arranged by Wachovia. The group expects the new JPS Industries to have annual sales in excess of $325 million, from five manufacturing facilities in three business units: Composite Materials, Stevens Roofing and Stevens Urethane.
Fulbright pointed out that this is "the first of several" expansions planned in each of the group's business, either as organic growth, product line extensions or, potentially, other acquisitions.
The acquisition is expected to be completed in the third quarter of 2007.
JPS has plants in Slater, South Carolina; Westfield, North Carolina; and Easthampton, Massachusetts. epw