New Zealand’s Fletcher Building group has offloaded loss-making UK laminates firm Formica for $840 million (£662m) to a Dutch holding company with a focus on surfacing materials.
The agreement with Broadview Holding, subject to regulatory approvals and due diligence, includes Formica’s operations in North America, Europe and Asia as well as its Homapal laminates business in Germany.
Fletcher Building chief executive Ross Taylor said: “We are pleased to have signed the sale agreement in line with our target timing and to have achieved a strong valuation for the business.
“We believe Broadview is a natural owner of Formica, being a leading player in the laminates industry. We are confident that the regulatory process required to complete the sale will go smoothly and on that basis expect the sale to be completed by the end of FY19.”
Formica Group is a world leader in branded, design-coordinated laminate surfacing solutions for commercial and residential customers.
The manufacturer has about 3,400 employees around the world and in its last full-year accounts to the end of June 2017, said sales were £77.5m, up from £64m the year before, despite the UK market being weak.
While it was still loss-making, it said that losses had narrowed by £6m from £13.1m the year before.
Fletcher has pumped money into Formica over the past few years to turn around the company as part of a three-year £40m investment plan to make it more competitive ahead of Brexit.
This included improving its operations facility and offices in North Shields, where the firm has been based for more than 70 years and the site is now the laminate manufacturer’s European head office.
The investment has supported innovation at the firm, enabling it to launch a range of laminates last year that it said offered the authentic look of premium materials such as marble, quartz and wood.
The Washroom Optimised range was also introduced in 2017, providing new and more efficient sheet sizes for the washroom market and a pipeline of new product are on the cards in 2019.
Over the past two years or so, Formica has also doubled its UK sales force and increased the mainland European sales team by 30%.
Taylor said that the sale of Formica completed its strategy to exit non-core international businesses, refocusing its business on a narrower set of priorities in New Zealand and Australia.
Formica Group was part of the Fletcher Building portfolio since July 2007.
Earlier this year when, Fletcher announced intentions to sell Formica, Peter Rush, president of Formica Group, said: “Under Fletcher Building’s ownership, Formica Europe has received record levels of investment to drive improvements in safety, service and manufacturing excellence and to create an innovation pipeline that will allow us to continue the turnaround through sales growth.
“While we will miss being part of the Fletcher family, the investment that we announced last year will continue to be delivered in full, culminating with the commissioning of the new plant equipment later this year.
“With this, the future looks bright for our business and we are enthusiastic about what lies ahead.”
Broadview’s material technology group of companies includes surfacing businesses Trespa and Arpa, which produce and sell composite panels – Trespa for façade cladding and laboratory furniture, Arpa for a variety of interior surfaces, such as kitchens and retail furniture.
Broadview called the transaction “a good fit”.
It said: “Broadview pursues long-term growth and value creation through active support of its operating companies and efficient capital allocation.
“Broadview aims to support its companies in their development to become and stay the point of reference in their industry.”
- Pictured top: Peter Rush, president of Formica Group, at the group’s HQ near Newcastle