Hillenbrand buying Milacron for $2 billion
The combined company is expected to generate annual sales of approximately US$3 billion and free cash flow of more than US$325 million by 2021.
Milacron Holdings Corp. is being sold to industrial equipment maker Hillenbrand Inc., the parent company of extruder supplier Coperion GmbH, for approximately US$2 billion.
The transaction, announced on July 12, is expected to close in the first calendar quarter of 2020, subject to customary closing conditions and regulatory approvals.
The combined company is expected to generate annual sales of approximately US$3 billion and free cash flow of more than US$325 million by 2021, the companies said in a statement.
Cincinnati, Ohio-based Milacron operates in three segments: Melt Delivery & Control Systems, which designs and manufactures hot runner and process control systems, mold bases, and components; Advanced Plastics Processing Technologies, which designs and manufactures plastics processing equipment and systems, including injection molding, extrusion, and auxiliary systems; and Fluid Technologies, which manufactures products that are used in a variety of metalworking processes.
“This transaction represents a pivotal step in Hillenbrand’s vision to become a world-class global diversified industrial company by adding new strategic businesses in hot runner systems and injection molding to Hillenbrand’s portfolio through Milacron’s leading brands, including Mold-Masters and Milacron injection molding,” the statement said. “Together, the combined company will have increased scale and meaningful product diversification, enhancing its ability to serve customers through complementary technologies across the plastics value chain, including plastic base resins production, compounding, processing both extruded and injection molded products, and recycling.”
In the statement, Batesville, Ind.-based Hillenbrand outlined a number of what it calls strategic and financial benefits of the transaction:
- Enhanced growth opportunities with leading brands and new technologies. The combined company will be able to leverage its industry-leading technologies and broadened product offerings to reach additional customer segments. Milacron’s technologies will enable Hillenbrand to offer solutions across key conversion steps in plastics processing including injection molding, extrusion and hot runner systems. Additionally, the combined company will have an expanded reach in attractive end markets, including construction, consumer packaging, automotive, electronics, medical and recycling.
- Complementary businesses with increased scale and diversification. With Milacron, Hillenbrand will add new complementary businesses to its portfolio, including leading positions in plastics technology and processing. With broader global scale and a presence in more than 50 countries, the combined company will be well positioned to capitalize on emerging trends across the plastics value chain.
- Creation of efficiencies with significant cost synergies. Milacron will benefit from the Hillenbrand Operating Model, and Hillenbrand expects to leverage Milacron’s global shared services center to drive operational efficiency. The transaction is expected to generate annualized, run-rate cost synergies of approximately $50 million within three years following close, primarily through reducing public company costs, realizing operating efficiencies, and capturing direct and indirect spend opportunities. The transaction is also expected to generate revenue synergies, driven by opportunities to cross-sell extruder and material handling equipment, and to leverage the combined service footprint to further penetrate the product aftermarket. These efficiencies will be driven across the combined organization through utilizing the HOM, while maintaining a commitment to serving customers with excellence and innovation.
- Strong financial benefits. The transaction is expected to deliver double-digit adjusted EPS accretion in the first year following close and will immediately improve adjusted EBITDA margin. Hillenbrand anticipates further margin improvement as the combined company leverages scale and realizes cost savings. Hillenbrand expects to generate approximately $3 billion in revenues and free cash flow greater than $325 million annually by 2021, retain its investment-grade credit rating and deploy cash flow aligned with its capital allocation strategy, including maintaining its quarterly dividend. Hillenbrand expects to refinance Milacron’s outstanding debt at close and reduce net leverage to below 2.75x within 12 months post-close.
“Hillenbrand has a tremendous track record of growing and driving value across its portfolio of highly engineered products,” Milacron CEO Tom Goeke added in the statement. “Together, we will continue to provide customers with breakthrough products and customized systems. This combination is a result of the Milacron team’s tremendous progress in enhancing our position as a global leader in plastics technology and processing. I am confident we have found a strong partner in Hillenbrand and look forward to a seamless transition.”