Datwyler expands sealing reach with two deals

ALTDORF, Switzerland—Datwyler Holding A.G. has been busy extending the reach of its Sealing Solutions business recently.

The firm made two acquisitions to strengthen its global footprint and expand into a new industry. Datwyler finalized an agreement to acquire Bins Industria de Artefatos de Borracha Ltda., an automotive sealing manufacturer located in Poto Alegre, Brazil. It marks the first manufacturing site for Datwyler in the South American region and will allow it to funnel its products through that site to serve local customers.

In a separate move, the firm agreed to acquire Parco Inc., a U.S.-based manufacturer of O-rings for a variety of industries, primarily oil and gas, which represents a new market for Datwyler. The deal is expected to close in the coming weeks.

Datwyler did not disclose financial details for either transaction.

"We always are looking for family-owned companies because that is an important part of our strategy," Datwyler CEO Dirk Lambrecht said. "We try to identify companies that are in a similar field in which we are, that happened with both Bins and Parco. Often times the reason such companies are willing to go into discussion with us is because we have a family background and offer the typical values of a family-owned company. That helps us in negotiations with some parties."

The deal for Bins, which closed at the end of August, will fill what Lambrecht said was a key geographical gap in its automotive segment. Datwyler now will have production plants in all "relevant" markets—the Americas, Europe and Asia-Pacific.

"What is very important for us is to improve access to the South American region, especially the automotive market in Brazil," Lambrecht said. "We hadn't had production there, so we're looking to use this site in the future to add our portfolio to this market. Some of our customers have asked us in the past to offer our products directly from Brazil."

Bins is a family-owned company with extensive experience in developing and manufacturing elastomer seals for the automotive industry, which accounts for about 80 percent of its business. The firm produces its own molds and operates a mixing facility. It also has an aftermarket presence with imported commercial products and does some business within the industrial segment.

The firm employs about 350 people at its lone facility in Porto Alegre with annual revenue of about $20.4 million. Datwyler said all employees and management will transfer with the business.

Datwyler intends to utilize Bins' distribution network to offer both auto makers in Brazil and existing customers in South America its full range of products, including O-rings and thermoplastic and silicone components.

Bins utilizes a variety of compounds, but mainly those derived from SBR, nitrile rubber, thermoplastic elastomers and silicone. Its sealing products generally are found within automotive braking applications—like lip seals and membranes. Lambrecht said injector seals are the primary product within its aftermarket business.

New frontier

The Parco deal will strengthen Datwyler's sealing presence on three other fronts. First by significantly expanding its O-ring business, which currently consists of the legacy business acquired in the 2015 takeover of Origom S.p.A. (now Datwyler Sealing Solutions Italy S.p.A.).

"We wanted to increase our O-ring portfolio," Lambrecht said. "The oil and gas industry has faced several drop-downs, the last one in 2015, but now we see a recovery of this industry and believe now is the right time to invest in (this) area. We believe we can benefit from the increasing trend for such products."

Parco makes customized elastomer seals and serves multiple industries throughout the U.S., including oil and gas, aerospace, water filtration, farm, construction and fuel-dispensing. The firm develops its own compounds with its own mixing facility, includes an engineering department, die production and produces its own molds.

The firm posted revenue of $61.5 million in 2017.

On a geographic front, the deal brings four facilities into Datwyler's overall footprint, in Ontario, Calif.; Montgomery, Texas; Dallas; and Gray, La. All 275 employees and management will transfer with the business.

"This company is well positioned in the oil and gas industry," Lambrecht said. "It is a very fast-growing company with good margins. It was very important that we have further opportunities in the future within industrial applications. We've invested mainly in the U.S. for the health care industry, but now we are stepping into new industries and widening our footprint in the U.S."

Datwyler's Sealing Solutions business accounts for about two-thirds of the group's overall revenue at $855.8 million in sales for 2017. It operates 20 manufacturing sites throughout Europe, Asia-Pacific and the Americas with 7,000 employees, including Bins and Parco.

The firm's main industries are medical, automotive and general industrial. On the medical front, Datwyler opened a new 200,000-sq.-ft. facility in April, representing an investment of more than $100 million. Based in Delaware, the site will produce high-quality elastomer components for pharmaceutical containers and injectable drug delivery systems, such as pre-filled syringes.

"Sealing Solutions is key for the success of the Datwyler Group," Lambrecht said. "We have huge opportunities in different markets. That will help us accelerate our profitable growth."