Texel is a leading producer of needlepunch nonwoven materials serving the geosynthetic, liquid filtration and other industrial segments. The acquired business consists of three manufacturing operations and one distribution center located within the province of Quebec, Canada and has approximately 300 employees.
For Texel’s fiscal year ended January 31, 2016, revenue was approximately $72 million and adjusted EBITDA $12 million. The business is expected to be fully integrated by 2018, and Lydall expects to leverage its operating discipline, business efficiencies nd economies of scale to generate estimated annual cost savings of approximately $2 million. These savings are not contingent upon anticipated revenue growth of approximately 5 percent per annum.
The acquisition will be included in Lydall’s Industrial Filtration operating segment, which will be renamed Technical Nonwovens. Each respective business will continue to approach the market and customers as they have prior to the combination given their respective strong brand recognition in the markets they serve.
The acquisition was financed through a combination of cash on hand and $85 million of borrowings from the company’s amended revolving credit facility, which was increased to $175 million. The amended facility provides additional capacity to support organic growth programs, fund capital investments and continue pursuits of attractive acquisitions that will drive profitable growth.
“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," says CEO Dale Barnhart. " 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 nonwoven materials.”
Lydall established the Industrial Filtration business in 2014 after acquiring needlepunch nonwoven manufacturer Andrew Industries. "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." Barnhart adds. " 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.”