Update: Crane reaches deal to sell technical materials division
DALTON - Crane & Co. has reached an agreement to sell its Pittsfield-based technical materials division for $72 million to Neenah Paper Inc. of Georgia.
Neenah will employ all existing personnel in the technical materials division - about 100 workers, all of whom are based in the Berkshires. One of the county's largest employers, Crane employs some 1,330 workers worldwide.
Neenah's management team was expected to speak with employees on Thursday, according to Crane spokesman Craig Conrad.
The acquisition will be financed primarily through available cash, according to Neenah, and the sale is expected to close in early July.
"This is a very successful outcome for all parties involved," said Crane CEO Stephen P. DeFalco in a statement. According to Neenah, the purchase price includes $64 million for the business, and $8 million related to future cash tax benefits that Neenah will receive as a result of the transaction.
A publicly traded company based in Alpharetta, Ga., a suburb of Atlanta, Neenah Paper has net sales of $850 million and 1,875 employees. Its products are sold in 70 countries. Neenah also has another business partnership with Crane that began in 2007.
Crane placed its technical materials division, which dates back to the 1950s, on the market in February, following the results of a comprehensive strategic review that the company undertook in 2013. Crane also operates currency and stationary divisions.
Crane had received other offers for its technical materials division, but Conrad said the division fits well into Neenah's portfolio.
"It extends their product line, and they don't have overlapping products of technology," he said
The industry sector is experiencing significant consolidation around large global players and it was determined that selling this business would allow it to be part of a larger entity with a broader portfolio and the technical resources to accelerate its growth, Conrad said.
"The consolidation going on in the nonwovens industry sector means the players are getting bigger," he said. For Crane's technical division to get to the next level, Conrad said that section of the company, "needed to be part of one of the global leaders."
Neenah also has a prior history in the Berkshires.
In 2007, Neenah purchased the former Rising Paper Mill in Housatonic from Fox River Paper Co. as part of a $52 million, four plant transaction, then closed the facility two weeks later eliminating 137 jobs. Neenah sold the then vacant Rising Paper Mill to the Hazen Paper Co. of Chicopee for $785,000 in 2008.
Crane's technical materials division has annual sales of approximately $50 million, according to Neenah. It operates out of two facilities in Pittsfield, the Government Mill on Dalton Avenue, and a facility at Ashuelot Park 2 on Hubbard Avenue that underwent a $5 million facelift in 2013.
Founded in 1801, Crane is Berkshire County's oldest paper manufacturer. It has supplied currency paper to the U.S. government through its currency division since 1879, and been its sole supplier since 1964.
In its technical materials division, Crane takes polymer fibers and inorganic fibers, like glass, and turns them into use for water purification and air filtration systems, thermal, acoustical and electrical insulation in home and office products, photovoltaic facilities, and the aerospace business.
"This acquisition clearly fits our strategy of expanding in profitable, performance-oriented markets with above average growth rates and provides a U.S. filtration presence that nicely complements our German-based filtration business," Neenah CEO John O'Donnell said in a statement.
According to Neenah, approximately $2 to $3 million of one-time costs are expected in 2014 related to the acquisition of Crane's technical materials division. Annual earnings are expected to be approximately 20 cents per share accretive, excluding one-time costs and benefits of lower cash taxes.
In 2007, Crane signed an exclusive partnership agreement with Neenah that would allow the Georgia-based firm to manufacture, market and distribute five of Crane's fine business paper brands. The agreement was extended in 2009.
TALK TO US
If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.