VILLARREAL, Spain—Ferro Corp., a global supplier of coatings and color solutions, has agreed to sell its tile coatings business to Pigments Spain S.L., part of the Esmalglass-Itaca-Fritta portfolio company of Lone Star Funds.
The deal was made for $460 million in cash, with the potential for $32 million more depending on the performance of the business pre-closing. Completion of the sale is subject to regulatory approvals and other customary closing conditions.
Ferro's tile coatings business, which makes coatings for ceramic tiles used in residential and nonresidential construction, saw annual sales of about $510 million for the 12 months that ended Sept. 30, 2019.
Peter Thomas, Ferro Corp. chairman, president and CEO, said in a news release that the transaction "will result in a Ferro more fully focused on higher-growth industries where our market-leading technology, innovation and customer-centric service generate higher gross margins. The transaction also will reduce our manufacturing footprint and end-market exposure in Europe, optimizing our portfolio with more equal balance between Europe and the rest of world and with less exposure to commercial and residential construction markets."
Thomas said the net proceeds from the sale primarily will be used to pay down debt.
Additional details of the deal will be discussed during the company's fourth quarter 2019 earnings conference call.
Headquartered in Mayfield Heights, Ferro employs about 5,900 worldwide and reported 2018 sales of $1.6 billion.
Esmalglass-Itaca-Fritta group, based in Villarreal, is a manufacturer of colors and glazes for the ceramic sector with sales of about $523.8 million in 2018. The group employs about 1,650.