American Securities completes sale of Royal to H.B. Fuller

NEW YORK—American Securities L.L.C., a U.S. private equity firm, completed its sale of Royal Adhesives & Sealants to H.B. Fuller Co. for $1.58 billion. H.B. Fuller is a global adhesives provider focusing on adhesives, sealants and other specialty chemical products.

Royal, headquartered in South Bend, Ind., is a global developer and manufacturer of proprietary, high-performance adhesives and sealants, with specialty formulated products. The company employs 1,500 people at 19 manufacturing sites in five countries with the bulk of its presence in North America. About 38 percent of its business comes from elastomer-based products.

The entire management team at Royal will remain, according to Scott Wolff, managing director of American Securities.

American Securities and H.B. Fuller reached the agreement Sept. 4. It brings about $650 million in revenue and $138 million in adjusted EBITDA to H.B. Fuller for fiscal year 2017.

H.B. Fuller CEO Jim Owens said on a Sept. 5 conference call that he did not envision the need for a full-scale consolidation effort, but the sale will drive efficiency and eliminate redundancy where needed. The business fits with a strategy to shift H.B. Fuller's portfolio toward engineering adhesives and other specified end markets.

All of Royals employees and production sites will transfer to H.B. Fuller, according to Royal Adhesives CEO Ted Clark.

The deal brings H.B. Fuller's fiscal year 2017 revenue to $2.85 billion. It also will bring about $35 million in cost synergies, said Owens.

Currently H.B. Fuller generates about 44 percent, or $968 million, from its highly-specified business segments—which include engineering adhesives, durable assembly and construction products—and the remaining from hygiene, packaging and other segments.

With Royal's business—which generated about 87 percent of its sales, or about $565.5 million, from those highly specified areas—H.B. Fuller will get about 53 percent of its sales, or $1.51 billion, from engineering adhesives, durable assembly and construction products. Owens said the breakdown is projected to reach 57 percent of sales, or $1.82 billion, focused on those three segments by 2020.