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Lydall To Acquire Gasket And Specialty Materials Manufacturer Interface Performance Materials

The Interface business will become part of the Performance Materials operating segment with the expectation to complete integration within one year of closing.

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Lydall Inc. has entered into an agreement to acquire Interface Performance Materials for $265 million in cash. The company says the transaction will further advance Lydall’s engineered materials offering in new markets with similar technologies utilized in its Performance Materials business.

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Lydall Inc. is a New York Stock Exchange listed company, headquartered in Manchester, Connecticut, with global manufacturing operations producing specialty engineered products for the thermal/acoustical and filtration/separation markets.

Interface is a leading globally recognized brand that delivers complete sealing solutions with a comprehensive product portfolio, deep in-house technical capabilities and vertical integration, according to Lydall. The transaction is expected to close in the third quarter of 2018, subject to the completion of specified closing conditions, including receipt of customary merger control approval from U.S. authorities.

A leader in the delivery of engineered sealing solutions, Interface partners with OEMs and Tier 1 manufacturers to serve both OE and aftermarket needs in segments such as automotive, agriculture, construction, earthmoving and industrial. Headquartered in Lancaster, Pennsylvania, Interface supports its global sales with manufacturing sites in the U.S., Germany and India.

Interface reported sales and Adjusted EBITDA for the fiscal year ended Dec. 31, 2017 of $142 million and $26 million, respectively. The business is expected to achieve sales of approximately $150 million and Adjusted EBITDA of approximately $29 million in the trailing 12 months ending Aug. 31, 2018. Lydall expects to leverage its business efficiencies, operating discipline and economies of scale to generate an estimated annual cost savings of approximately $4 million by 2020.

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The acquisition is expected to be accretive to Lydall’s earnings, net of the effects of purchase accounting approximately six months after closing. Lydall’s financial results for the second quarter 2018 included approximately $1.1 million of expenses related to this transaction, and it is estimated that approximately $3 million of additional non-recurring transaction and integration expenses will be incurred over the second half of 2018 and approximately $1 million in 2019.

The Interface business will become part of the Performance Materials operating segment with the expectation to complete integration within one year of closing. The transaction is expected to be financed predominantly from borrowings under the company’s amended credit facility, the provisions of which are being finalized with the company’s banking partners.

Dale Barnhart, Lydall’s President and CEO, commented, “We are extremely excited about yet another transformational acquisition for Lydall. Interface Performance Materials expands our engineered materials portfolio with favorable margins while further shifting our concentration away from Automotive, which continues to be the focus of our long-term strategy. Interface is very well-known in the industry for providing high-quality solutions and is uniquely positioned with deep in-house expertise for research, design, testing, production and fabrication.”

Barnhart added, “Additionally, the culture, innovation and technology similarities between Interface and our legacy Performance Materials business create a complementary fit and provide opportunities for future growth. We look forward to welcoming Interface’s employees to the family once the deal closes.”

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Victor Swint, president and CEO of Interface Performance Materials, commented, “I am proud of the company we have built and am excited that Interface will have the opportunity to achieve even greater success as part of Lydall. Lydall’s goals are well aligned with our core values, including commitment to integrity, performance and innovation, and with this transaction, we will continue to deliver best-in-class products and solutions. This is a significant next chapter for Interface, and I am incredibly excited about our future with Lydall.”

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