Equity firms set to purchase foam maker Armacell

NEW YORK—Two private equity firms, the Blackstone Group L.P. and Kirkbi a.s., plan to purchase Armacell L.L.C. from Charterhouse, which, officials at the companies said, should expand Armacell's international reach.

Financial terms of the proposed acquisition were not disclosed. Blackstone said it expected the transaction, subject to the usual closing conditions and regulatory approvals, to close in the early part of the first quarter of 2016.

Because it won't take ownership of the producer of flexible insulation and engineered foams, including those made from elastomeric materials, for about a month, Andrew Dowler, managing director of Blackstone's London operation, said it was too early to provide many details about the transaction.

New York-headquartered Blackstone, with numerous offices spread around the globe, said the experienced management team led by President and CEO Patrick Mathieu, who has more than 25 years of experience in the field and has headed up the company since 2012, will remain on board.

Commenting on the acquisition, Mathieu said “now is the prefect time to take the business to the next level. Armacell will benefit from Blackstone's international experience and expertise as we enter the next phase of growth. As such, we are delighted to partner with them going forward.”

Lionel Assant, head of European Private Equity at Blackstone, said Armacell will continue to benefit from such trends as global energy efficiency with its products.

He said the company's “strong product innovation should also enable the business to continue growing on its existing and new insulation markets.” Assant added that Blackstone looked forward to working with the company to capitalize on future growth opportunities, both organically and through acquisitions.

Globally based in Luxemburg—with three regional headquarters in North Carolina, Germany and Singapore—Armacell has a work force of more than 2,600 employees globally at 23 manufacturing plants in 16 countries on four continents. The company generated sales of $489.3 million in 2014.

“Over the last three years, we have expanded our global footprint in Asia, India and the Middle East, and we have acquired Oneflex, a leading Turkish insulation materials manufacturer, as well as the business of Industrial Thermo Polymers Ltd., the leading polyethylene insulation foam manufacturer in Canada,” an Armacell spokeswoman said.

In addition, she said, the company recently added its own manufacturing plant in Russia.

With Blackstone and Kirkbi in the picture, Armacell will “consequently drive the growth of the company forward and through the global trends (of) energy efficiency and substitution of existing insulation material, which will increase the demand for Armacell's high-tech products long term,” the spokeswoman said.

She noted that both North and South America are important parts of the firm's growth plan.

Armacell operates two primary businesses: Advanced Insulation and Engineered Foams. The advanced insulation unit makes flexible foam products for mechanical equipment used in end markets where energy distribution is required, such as commercial and residential construction, industrial applications, and the oil and gas industry.

It also manufactures specialty insulation products mainly for air conditioning and plumbing pipes.

Armacell's flexible insulation products have a positive impact on the environment “since equipment insulation is one of the most simple and efficient ways to save energy and reduce CO2 emissions,” according to Lau Schleicher, senior vice president for long-term equity and private equity at Kirkbi.

Its engineered foam operation focuses on specialty light engineered foams for use in automotive and sports applications as well as in the medical and industrial sectors.

Shortly before the planned acquisition was announced, Armacell relocated its Americas headquarters to Chapel Hill, N.C., from Mebane, N.C., which had been its base for the last 15 years.

It moved to the new site because the company outgrew its office space at the Mebane plant because of steady growth over the last few years, another Armacell spokeswoman said.

“This is a great opportunity to design a work place that encourages innovation and collaboration,” according to Jodi Cheek, general manager HR Americas.

Its newest facility spans 10,800 square feet where about 30 regional headquarters employees are housed, although some office staff remained in Mebane, the spokeswoman said. The move frees up space at the Mebane plant for the firm's expanded customer service, research and development, and technical support units.

About 225 are employed at the manufacturing complex. At just under 500,000 square feet, it is the company's largest plant in the U.S., she said. The factory primarily produces Armaflex elastomeric foam insulation along with some other products.

Armacell operates five U.S. manufacturing facilities, another in Canada and one in Brazil as part of its Americas operation.