CLEVELAND, OH --- Ferro Corporation has acquired Electro-Science Laboratories, Inc. (“ESL”). Ferro paid $75 million excluding customary adjustments and fees for the privately held company headquartered in King of Prussia, Pennsylvania.
Full-year 2016 adjusted EBITDA is expected to be $9.2 million, suggesting a transaction multiple, excluding synergies, of 8.2x. Ferro expects synergies in excess of $10 million, with $6 million realized within the first three years of operation. The Company expects the transaction to be accretive to earnings in year one.
The acquisition of ESL enhances Ferro’s position in the electronic packaging materials space with complementary products, and offers an attractive platform for growth in Ferro’s Performance Colors and Glass business unit.
ESL produces thick-film pastes and ceramic tape systems that enable important functionality in a wide variety of industrial and consumer applications. Its key products are used to build hybrid integrated circuits, modules and sensors that function in harsh conditions. Hybrid integrated circuits using ESL products are used in aerospace and defense applications, such as satellites. The modules and sensors are used in automobile components, including oxygen sensors. ESL products in heat sensors are used in appliances such as ovens and water heaters. ESL paste systems for heaters are used on a wide variety of substrates, including metal, ceramic and glass. ESL was founded in 1962 and has remained privately owned and associated with the founding family. The business has operations in the United States and United Kingdom and has 86 employees.
About Adjusted EBITDA Guidance
Adjusted EBITDA excludes the impact of certain items that are not expected to recur. Ferro is unable to reconcile ESL’s adjusted EBITDA for full-year 2016 without unreasonable effort. It is not possible at this time to identify the potential amount or significance of these items for the balance of the year, as they have not yet occurred.