AirBoss inks deal to buy custom mixer Ace Elastomer

NEWMARKET, Ontario—AirBoss of America Corp. has reached an agreement to purchase custom rubber compounder Ace Elastomer Inc. in a deal valued at about $42.5 million.

Ace Elastomer has mixing facilities in Rock Hill, S.C., and Chicago, and will help boost AirBoss Rubber Solutions' (ARS) position in the North American rubber compounding market, according to a news release issued by Newmarket-based AirBoss. The deal is subject to customary closing conditions and is expected to be completed by the end of this year's third quarter.

Ace provides design, formulation development and custom mixing of proprietary elastomer compounds across the natural and synthetic polymer range. It serves a broad range of industries, including the roller, belting and printing industries, and for custom molding and extrusion applications.

AirBoss said Russell Foster, Ace's president, founder and majority owner, will remain in his current capacity following the close of the deal, as will the rest of Ace's existing management team.

"Ace specializes in colored rubber compounds, a key focus area of growth for ARS. We expect this acquisition to propel AirBoss into a market leading position in color and specialty compounding while providing immediate access to a customer-base in key targeted regional U.S. markets," said Chris Bitsakakis, AirBoss president and chief operating officer.

He added that AirBoss "will continue to assess further M&A opportunities that can complement our organic growth strategy by accelerating penetration of our color and specialty compounding business into key U.S. markets."

AirBoss said the acquisition of Ace will strengthen the firm by:

• complementing investments made by AirBoss in color and specialty compounding with the addition of two new dedicated lines in its Kitchener, Ontario, operation in 2019;
• accelerating ARS' strategy to expand from traditional black, high volume product lines into lower volume but typically higher margin color and specialty markets;
• expanding its reach into the U.S. South and Midwest;
• providing minimal overlap in customer-base presents opportunities for revenue synergies; and
• establishing a market-leading position for ARS in the rubber roll market.

AirBoss also said the transaction is expected to have an immediate positive impact on earnings, and has the potential for "cost and revenue synergies to be realized across ARS in future years."

Ace's Foster said his firm will benefit from having access to AirBoss' global supply chain expertise, its leading research and development infrastructure, application experience and customer relationships.

"Like ARS, Ace's focus is on working successfully with customers across multiple channels to develop innovative and proprietary solutions and deliver high quality compounds, while operating in an environmentally responsible manner," Foster said. "We're excited to work with ARS and take advantage of the minimal overlap we have in our combined customer base by expanding the available products and solutions we can offer."

Besides ARS, AirBoss also includes AirBoss Defense Group and AirBoss Engineered Products. For the second quarter, the publicly held firm posted net income of $24.6 million on sales of $225.8 million.