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Product lines, revenue diversity key for AirBoss

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NEWMARKET, Ontario—AirBoss of America Corp. plans to purchase Flexible Products Co. to extend its reach into the automotive market.

AirBoss will pay about $51 million in an all-cash transaction to acquire the Auburn Hills, Mich.-based maker of anti-vibration products. The companies hope to close the deal, which is subject to working capital changes, by mid-October.

Completion of the sale will mean a major shift for AirBoss. For the last several years the company was primarily a rubber compounder and manufacturer of products for the military and first response markets.

Flexible Products will expand AirBoss' product lines significantly and diversify its revenue and cash flow, according to Robert Hagerman, president and CEO of the Newmarket-based company. The addition will increase AirBoss' sales by 30 to 40 percent, he said.

Flexible Products employs about 300 and operates a three-plant complex in Auburn Hills. The firm also is part of a joint venture in Malaysia, said Robert Dodd, executive vice president of AirBoss and head of the firm's compounding services,

Flexible Products' three plants span 148,000 sq.-ft., 120,000 sq.-ft. and 43,000 sq.-ft., which gives it about 311,000 square feet of manufacturing space.

Its management team, led by President Doug Reid, will remain with AirBoss as will its work force, Hagerman said.

Hagerman said the business is expected to generate sales of $100 million to $110 million and earnings before interest, taxes, depreciation and amortization of between $8 million and $9 million.

"We believe Flexible Products' anti-vibration solutions are well positioned to benefit from future trends in the automotive market, most notably the demand for higher fuel efficiency driving the increased use of power train technologies, engine downsizing, and high strength steel and alternative materials," he said.

He said that with the help of AirBoss, Flexible Products can expand and grow.

"The dedication of our people has enabled Flexible Products to become a leader in the automotive anti-vibration solutions market, and we see the sale to AirBoss as the natural progression to future growth," Reid said.

He said the company has had several opportunities to accelerate its growth to support its customers in other geographic regions, such as Mexico, South America and Asia.

"AirBoss has the scale and capital required to take advantage of such opportunities in the future," he said.

The company needs larger critical mass to expand, Hagerman said. "We can do that for them. If they need an infusion of money, we can help."

Flexible Products designs, engineers and manufactures rubber and synthetic rubber products—including bushings, dampers, boots and isolators—that are used to eliminate or control vibration and noise in vehicles. It launched more than 50 new products in 2013, Hagerman said.

The company was founded in 1946, and purchased in 1980 by Glenn J. Reid, its longtime president who died May 25 at age 81. Originally making its mark with muffler hangers, bushing and spring insulators, Flexible Products became a significant supplier of injection-molded rubber auto parts used by the Detroit 3 automotive companies.

AirBoss develops and manufactures rubber-based products for the transportation, military and industrial mar-- kets.

The company's rubber compounding operation has the capacity to supply more than 250 million pounds of custom rubber mixes annually to a diverse group of manufacturers

Dodd said the acquired company is very strong in the area of rubber-to-metal bonding.

In the past, AirBoss' compounding business combined with Flexible Products to develop a unique rubber-to-metal bonded material for vibration control, Dodd said.

The acquisition is expected to be accretive immediately to AirBoss' earnings and cash flow, Hagerman said.