WILMINGTON – About six months after ending its pursuit of a major acquisition of Rogers Corp., DuPont announced Tuesday morning that it has reached a smaller deal for a specialty plastics manufacturer that focuses on the growing biopharmaceutical market.
The Wilmington-based advanced materials company has agreed to acquire Atlanta-based Spectrum Plastics Group for $1.75 billion from its private equity firm owner, AEA Investors.
That price is about 15.6 times the 2023 forecast EBITDA for Spectrum and will be paid from cash savings. DuPont has significant reserves after selling its Mobility & Materials segment to Celanese Corp. for $11.2 billion last year. The deal is anticipated to close in the third quarter, subject to regulatory approvals and other customary closing conditions.
Spectrum, which has 2,200 employees in 20 locations in North and Central America, the closest of which is in Wall Township, N.J., focuses on specialty medical devices and components, with a strategic focus on key fast-growing therapeutic areas such as structural heart, electrophysiology, surgical robotics and cardiovascular.
It produces a variety of tubing, catheters, balloons, laser processing, injection molding and packaging films, working with 22 of the top 26 medical device original equipment manufacturers (OEMs).
The addition of Spectrum would complement DuPont’s existing offerings for biopharma and pharma processing, medical devices and packaging, including its Liveo silicone solutions and Tyvek medical packaging, the company said. It also would result in about 10% of DuPont’s consolidated revenue coming from health care, which is considered a low-cyclicality market.
In a Tuesday earnings call with analysts, DuPont CEO Ed Breen noted that Spectrum has been a DuPont customer and the company has eyed it as an acquisition target “for a very long time.”
“The real opportunity here is going to be on the growth side,” he said. “Our relationships at DuPont are mainly … with the biopharma OEMs. Spectrum’s [relationships] are more with the medical device OEMs, but a lot of our technology actually goes through companies like Spectrum into that industry. So when we look at the ability for DuPont to move our technologies and material science into the medical device market with Spectrum and the opposite of that, Spectrum moving into the biopharma space … we can drive some nice incremental growth.”
Delivering consistent high single-digit growth rates for many years, Spectrum is expected to generate revenues of about $500 million this year, according to DuPont CEO Ed Breen.
DuPont will also continue to look to sell its industrial strength resin Delrin product line, with a sale anticipated to be completed by the end of this year. Breen said that proceeds from that sale would not drive further deals right now.
“Right now, there is nothing else on the radar screen over the next year on the M&A side,” he said. “If I had to say right now, with any extra proceeds, I think we would lean towards additional share repurchase.”
