A. Schulman Inc. (NASDAQ: SHLM) said Thursday it agreed to pay $191.4 million to buy all outstanding shares of ICO Inc. (NASDAQ: ICOC), which makes custom polymer powders and plastic film concentrates, according to Associated Press.
A. Schulman which makes plastic compounds and resins for consumer and automotive markets, said the acquisition, which requires approval from ICO's shareholders, would improve its position in global markets. The transaction does not require approval by A. Schulman's shareholders.
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A. Schulman said the transaction will include $105 million in cash and 5.1 million shares of common stock. Shareholders of ICO, based in Houston, will receive about $6.79 per share. That represents a 51 percent premium over ICO's closing price of $4.50 Wednesday.
A. Schulman said it will pay the cash portion of the transaction from cash on hand.
Joseph M. Gingo, A. Schulman's chairman, president and CEO, said the acquisition provides A. Schulman the opportunity to significantly expand its global presence, particularly in rotomolding, or rotational molding -- a manufacturing process in which parts are assembled from several pieces molded as one, eliminating high fabrication costs.
The two businesses are complementary across markets, product lines and regions, Gingo said.
With the acquisition of ICO's operations, A. Schulman will increase its U.S. presence in masterbatch -- a concentrated mixture of pigments and additives -- and add plants in the high-growth market of Brazil and facilities in Australia.
A. Schulman also would add another facility in Asia, bringing to four its number of plants in the region.
If the deal closes in the spring, A. Schulman said the acquisition will contribute about $150 million to revenue and add to earnings on an operating basis in fiscal 2010.
ICO shares soared $2.08, or 46.2 percent, to $6.58 in afternoon trading, hitting a 52-week high of $6.67 throughout the day.
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