Core Molding Technologies acquires Horizon Plastics International
Core Molding Technologies, Inc. a leading North American compounder of custom sheet moulding compound and moulder of fibreglass reinforced plastics, has recently announced it has acquired substantially all the assets of Horizon Plastics International Inc. (“HPI”).
Founded in 1972, HPI is a custom low-pressure structural plastic moulder, which utilises both structural foam and structural web process technologies, with approximately 250 employees operating within two manufacturing facilities located in Cobourg, Ontario, Canada and Nuevo Leon, Mexico. The transaction is an all-cash acquisition for approximately $63 million, which Core will finance utilising existing cash on hand and a new $85 million senior secured credit facility consisting of a $45 million term loan and a $40 million revolver.
“Continuing to expand our technology offerings and diversifying our customer base and end-markets are key elements of our growth strategy,” said Kevin L. Barnett, President and Chief Executive Officer of Core Molding Technologies.
“HPI is a leader in structural foam and structural web moulding and continues to innovate around these moulding technologies. In addition to new technology offerings, the acquisition brings us existing programs with industry-leading customers in several new markets, experienced leadership, a motivated and capable workforce, and expanded geographic reach. We intend to utilise this significant knowledge base and capabilities resident in both facilities to continue to grow the HPI operations.”
“As I looked to transition ownership of HPI, it was important to find the right partner,” said Brian Read, CEO and owner of HPI. “As a long-term Cobourg resident and business owner, the future stability of the organisation and support of our outstanding technical and production teams was a high priority. I also favoured a strategic partner with the scale and technology foundation to continue growing these specialised processes into expanded applications,” he said. “Core Molding Technologies is that partner.”
Structural foam and structural web are low-pressure injection moulding processes. Because the processes are conducted at low-pressure, parts can be larger, more structurally sound, and have less internal stress than parts made using high-pressure. HPI’s low-pressure injection moulding processes use nitrogen gas with melted polymer to reduce the part weight by 20% to 30% or more compared to traditional injection moulding processes.
Structural foam and structural web represent niche-manufacturing processes in the injection moulding industry with only a limited number of companies focused on these technologies. HPI is well positioned within the industry as all its business and resources are dedicated to the structural foam and structural web technology.
HPI had annual sales for its fiscal year ended 31st August 2017 of approximately $60 million. The Company expects the transaction to be approximately $0.15 to $0.20 accretive to earnings per share for the calendar year 2018. Core plans to continue all HPI operations and does not expect any significant restructuring, shut-down or employee severance costs.
“We are excited about adding the structural foam and structural web technologies to our growing portfolio of processes, and to advancing the opportunities the HPI team has under development,” Mr Barnett said. “Additionally, we see opportunities to offer the structural foam and structural web technology to our existing customers and to cross-sell our current processes to HPI’s customers,” he said.
KeyBanc Capital Markets acted as exclusive financial advisor to Core Molding and STS Capital Partners acted as exclusive financial advisor to HPI.