MELKSHAM, England—Avon Rubber P.L.C. is getting out of the milking equipment business to devote full energy to personal protection gear.
The Melksham-based company is selling off its milkrite|InterPuls business to DeLaval Group, also a maker of milking equipment for dairy farmers around the world.
News of the deal comes on the heels of Avon Rubber's $50 million contract to supply mask systems to the U.S. Department of Defense. That agreement will see the company provide M50 mask systems, related spares and accessories over a five-year period.
While DeLaval sees milkrite|InterPuls as a natural add-on to its company, Avon Rubber is exiting that business to concentrate on the production of respiratory and ballistic protective gear for military personnel and first responders. That business unit is called Avon Protection.
DeLaval, based in Tumba, Sweden, is part of the Tetra Laval Group. The group includes Tetra Pak, a maker of aseptic containers for shelf-stable storage of beverages; and Sidel, a maker of plastic packaging equipment.
"Milkrite|InterPuls is a very successful company with a strong brand and trademark portfolio acknowledged by dairy farmers across the world. Milkrite|InterPuls will operate as a standalone company in the DeLaval organization," DeLaval CEO Joakim Rosengren said in a statement.
Avon Rubber is receiving $226.8 million in cash and will direct $25.2 million into the company's United Kingdom pension plan to improve funding. The remaining cash will flow to the company's balance sheet with an eye toward potential future acquisitions in the protection business.
While the two sides have reached an agreement, the transaction is still subject to regulatory approvals. Avon Rubber expects to finalize the deal later this year.
"Milkrite|InterPuls has been an important part of Avon Rubber for many years, however, the board believes that now is the right time to sell the business. We believe that under new ownership, milkrite|InterPuls will have the opportunity to continue to flourish and grow in the future," Avon Rubber CEO Paul McDonald said in a statement.
Milkrite|InterPuls has been a profitable business "for many years," Avon Rubber said. Sales during the last fiscal year that ended Sept. 30, 2019, were $64.1 million, and adjusted earnings before interest, taxes, depreciation and amortization were $13.2 million.
"This transaction represents an important step in the strategic development of Avon Rubber," McDonald said.
On the defense side, Avon Protection already has received an initial order from the DOD worth $16.3 million under its new M50 mask contract. The company soon will start delivery of that equipment.
"This sole source M50 sustainment contract … underpins the outlook for our military business and demonstrates our long-term relationship with this important customer," McDonald said.
Avon expanded its protection segment with the acquisition of M3's ballistic protection business in December 2019.
The company said the M50 mask system remains an important part of its protection portfolio, with the installed base of more than 2 million masks.