Hexpol acquires Preferred Compounding for over US$230 mn

Swedish Hexpol Group has acquired rubber compounder Preferred Compounding (Preferred) from US-based Audax Group, for approximately US$232 million, on a cash- and debt-free basis. The acquisition aligns with Hexpol’s market strategy for enhanced global capacity and competence in advanced polymer compounds.

It is believed that Preferred will provide significant competitive advantage to Hexpol’s customers from improved supply and leading research, development and engineering services. Preferred recorded sales of some US$240 million across markets in 2018, including those of general industry, automotive, power and infrastructure – its high-performance elastomer capabilities will add to Hexpol’s portfolio, following the acquisitions of the Mesgo Group and Kirkhill Rubber. Furthermore, as the acquired business has an EBITDA margin well below Hexpol, it is expected to favourably impact earnings per share.

The business was consolidated from July 1st, 2019, with possible restructuring and cost synergies to be evaluated and communicated separately at a later stage.

Tracy Garrison, President of Hexpol Compounding Americas, summarises: “Preferred Compounding has a legacy of technical excellence with compound products designed for the most critical applications – approximately 70% of the compounds are derived from proprietary or enhanced co-developments serviced by highly strategic relationships. This transaction immediately leverages our global supply chain and adds new capabilities; application know how and customer base, as well as broadens and strengthens Hexpol’s presence”.

The President and CEO of Hexpol Group, Mikael Fryklund, thanks Preferred’s CEO Ken Bloom, for the development of a well-run organisation: “This acquisition will strengthen our global positions in advanced polymer compounds with improved supply chain, cutting-edge expertise in polymer materials and solid knowledge of applications, and also brings many new and very experienced people into our group. Welcome aboard!”