Lydall Buys Texel For ~$96 Million In Cash

Lydall, Inc. LDL revealed that it acquired Texel, a division of ADS, Inc., for about $96 million in cash. The company said the transaction strengthened its position as an industry-leading, global provider of filtration and engineered materials. Also, the transaction enabled to expand its end markets into attractive adjacencies.

Lydall indicated that the acquisition would be accretive to its earnings, as well as, cash flow from operating activities within 12 months. Its financial results for the second quarter would include less than $2 million of expenses in connection with the tactical initiatives.

The company expects non-recurring transaction and integration costs of about $1 million related to the acquisition in the second half of the current year.

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Lydal President and CEO Dal Barnhart commented, "The acquisition of Texel is highly complementary as it diversifies our filtration and engineered materials business into attractive adjacent markets while leveraging our existing manufacturing capabilities and know-how. Texel has a proven culture of innovation and development, and we are excited for their employees to join the Lydall family. Furthermore, the acquisition provides an important step toward our 2018 long-term vision for profitable growth and establishes Lydall as one of the world's largest providers of non-woven materials."

Barnhart added, "As a result of the 2014 purchase of our Industrial Filtration business, we have gained valuable experience and confidence in acquiring and integrating a business. That integration was completed successfully and we expect the same level of success for this acquisition. We will apply Lydall Lean Six Sigma principles to the acquired business and expect to enhance margin and working capital performance."

The company said that for fiscal year ended January 31, Texel delivered revenue of approximately $72 million and adjusted EBITDA of about $12 million. The company expects the business to be integrated completely by 2018.

Lydall said it expects to leverage its operating discipline, business efficiencies and economies of scale to generate projected cost savings of about $2 million per annum. These savings were not contingent upon the expected revenue growth of about 5 percent a year.

Lydall closed Thursday's regular trading session at $39.76.