H.B. Fuller extends reach through acquisitionsBy Chris Sweeney
ST. PAUL, Minn.—H.B. Fuller Co. has extended its reach into two regions through multiple acquisitions.
The firm acquired 95 percent of Tonsan Adhesive Inc.'s equity for about $225 million on Feb. 2. According to H.B. Fuller, Tonsan is the largest independent engineering adhesives provider in China.
On Feb. 3, H.B. Fuller said it finalized its purchase of Continental Products Ltd., a provider of industrial adhesives to the East and Central Africa Markets based in Kenya. The business said the addition of Continental's business supports its strategy for emerging markets.
H.B. Fuller did not disclose the purchase price for Continental Products, but it said the firm generated about $2.64 million in revenue for fiscal 2014 and employs 26 at its 16,000-sq.-ft. facility in Nairobi, Kenya.
“Africa is an area of dynamic change and especially as you look out over the next 10 years, this is a very important strategic move for us to be in a part of the world that has huge leaps and bounds from a development standpoint to go,” said Jim Owens, H.B. Fuller president and CEO. “To be positioned here with the right people, the right factory and the right time allows us to be in a position to grow as investment goes into Africa.”
H.B. Fuller has integrated all of the employees from both acquisitions. Tonsan will be integrated into H.B. Fuller's Asia-Pacific operating segment, while Continental Products will be included in the Europe, India, Middle East and Africa segment.
Continental Products was founded in 1996 and develops adhesive solutions for a variety of industries—including paper converting, printing and packaging, labeling, laminating, bookbinding, automotive assembly, footwear, and construction. H.B. Fuller said the addition of the business will enable it to capitalize on access to local infrastructure in Kenya.
“It's mostly a geographic play,” Owens said. “Having a factory that produces products locally and access to a new distribution channel is a huge opportunity for us. They're well-established with local companies but especially with multinational companies. We have a network around the world that supports major multinationals. By having this operation in Kenya, as customers expand into Africa, we can be there to support their business.”
H.B. Fuller operates another manufacturing facility in Egypt. Continental Products has been H.B. Fuller's agent in the region since 2003.
Owens said Continental Products has the capacity to meet H.B. Fuller's growth projections for the next couple of years, but added that there are expansion opportunities in the future—highlighting the Western and South Africa regions.
“To be positioned in Kenya was a valuable opportunity for the long term for us,” Owens said. “In any country understanding what it takes to win locally is about having the right team and the right people. It was a good group of people that we worked with for a number of years as a licensee, so when they wanted to sell the business, it made a lot of sense for us to acquire.”
Owens said the Tonsan acquisition strengthens H.B. Fuller's position in the engineering adhesives market. The firm wants to take Tonsan and first help it grow in China through its global network and technology. But Owens said about 80 percent of the market for the adhesives Tonsan sells is outside of China, providing H.B. Fuller with plenty of opportunity to seek new business through Tonsan's technology.
Tonsan's adhesives are used in solar panels, industrial equipment, drivetrain, maintenance and repair, which involve a different set of reactive adhesives chemistries, Owens said.
“This is a very successful company that has learned how to grow and be profitable in China,” Owens said. “This will transform the culture of our Chinese business so that we become a stronger Chinese company able to compete in the Asian region with a stronger base of personnel that knows how to win in China.”
Tonsan generated about $100 million in revenue in 2014. H.B. Fuller said the four founding shareholders of Tonsan will remain with the company as part of the leadership team and retain a minority equity interest.
Tonsan operates two facilities in China—in Beijing and Suzhou—to go with the four facilities H.B. Fuller already operates in the country, located in Guangzhou, Yanti, Shanghai and Nanjing.
H.B. Fuller manufactures adhesives, sealants and other specialty chemical products worldwide and reported revenue of $2.1 billion in fiscal 2014. The firm serves the packaging, hygiene, general assembly, electronic and assembly materials, paper converting, woodworking, construction, automotive, and consumer industries.
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