Zep Acquires Amrep Inc. - aftermarketNews

Zep Acquires Amrep Inc.

Complementary product lines and diverse end-market exposure are expected to drive combined company growth.

ATLANTA — Zep Inc., a leading producer of specialty chemical products for industrial, institutional and retail companies, has acquired Atlanta-based Amrep Inc. – a leader in maintenance chemicals for the automotive aftermarket as well as the janitorial market sold through distributors – for a cash purchase price of approximately $64.4 million, subject to post-closing working capital adjustments.

The acquisition of Amrep is an important strategic step in Zep Inc.’s efforts to utilize distribution to expand its presence in a number of end-markets while minimizing channel conflict through the manufacture of both private-branded products and national brands. As a result of this transaction, Zep’s product and brand portfolio will now include Misty, Next Dimension, i-Chem and other Amrep proprietary brands. Operating as one of Zep Inc.’s decentralized divisions, Zep management said it believes that the addition of Amrep will complement the company’s existing capabilities while also creating a number of synergistic opportunities.

Amrep provides immediate new avenues into the industrial and institutional distribution channels, a $7.3 billion U.S. market that has not historically been a focus for Zep. Amrep’s Automotive Aftermarket Group provides Zep Inc. significant opportunities to accelerate its entry into this market with the addition of many of the company’s proprietary product formulas to the Amrep product line. The company said this acquisition also allows Zep Inc. to enter the U.S.-based Asian OEM market, which represents an entirely new and potentially significant growth opportunity. Management expects the combination of Amrep’s aerosol manufacturing and the company’s liquids and powders manufacturing to result in growth of private label product sales to distributors, retailers and other chemical manufacturers. Further, management believes noteworthy cost synergies are expected to benefit each organization. Upon the closing of this transaction, Amrep became a wholly-owned subsidiary of Zep Inc., and, in accordance with the company’s decentralized operating structure, Amrep will maintain its commercial organizations, brands and go-to-market strategies.

“I am extremely pleased to welcome Amrep Inc. to the Zep Inc. family,” said John Morgan, chairman, president and chief executive officer of Zep Inc. “Amrep has a strong and well-known reputation along with a solid customer base that we believe will seamlessly complement Zep Inc.’s current operations. There are meaningful synergies that, when achieved with prompt discipline, should add significant value to the combined organization. We look forward to partnering with Amrep to optimize potential synergies and efficiencies we believe exist within the overall supply chain, including the sourcing of raw materials, manufacturing and logistics. The combination of Zep Inc.’s existing product offering with Amrep’s existing customer base and chemical formulations broadens our product line of best-in-class solutions and significantly increases our access to market.”

Morgan also noted each organization has a growing line of environmentally friendly products that should continue to experience above-average growth provided favorable industry trends continue.

Joe Seladi, president of Amrep, added, “We are quite pleased to become a part of Zep Inc. We believe Zep’s capabilities and reputation will provide for the continued growth of Amrep’s brands. I expect our customers, many of which represent the best brands in the world, will regard this as a positive move, as they should see only improved products and service moving forward.”

Amrep will operate as Zep Inc.’s ninth division, with Seladi reporting to Morgan, and will maintain its current headquarters in Marietta, Ga.

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