A. Schulman buys concentrates maker McCann Color

FAIRLAWN, OHIO (Updated March 1, 4:20 p.m. ET) — A. Schulman Inc. has made its second acquisition in four months, this time acquiring color concentrates maker McCann Color Inc. for less than $10 million in cash.

McCann produces high-quality color concentrates, as well as UV absorbers, dry color and flame retardant compounds at a 48,000 square-foot plant. The firm also does toll compounding and blending work. End markets served by McCann include packaging, furniture and consumer products.

McCann “is a perfect fit with [Schulman’s] strategy to be a leading global manufacturer in the masterbatch business and, specifically, to advance the profitable growth of our North American color operations,” Schulman Chairman, President and CEO Joseph Gingo said in a March 1 news release.

The deal includes McCann Color, but not McCann Plastics, a separate compounding business located about a mile away from McCann Color in North Canton. Both businesses were owned by brothers Michael and Jim McCann.

McCann Color employs about 24, most of whom will be retained after the deal. Unit President A.J. Maghes also will be retained, McCann Plastics business development manager Bill Pappano said by phone March 1.

“We weren’t really looking to sell McCann Color, but an opportunity came along,” Pappano said.

The McCann brothers started McCann Plastics in 1989. They then launched McCann Color in 1998 after being frustrated in their search for a good color concentrates supplier, Pappano explained.

The color business at first supplied all of its output to McCann Plastics, but today sells about 80 percent of its products elsewhere. After the sale, the site will continue to supply color concentrates to McCann Plastics, which uses them in custom compounds based on both commodity and engineering resins, Pappano said.

No sales estimate for McCann Color was available. The remaining McCann Plastics business has annual sales of about $60 million. McCann Plastics will continue to own the McCann Color building and property and will lease it to Schulman.

Pappano emphasized that McCann Plastics is not for sale. “We’re not shopping it around,” he said.

As a result of the McCann deal, Fairlawn, Ohio-based Schulman will close its Polybatch Color Center in nearby Sharon Center, Ohio. Work done at Sharon Center will be moved to the McCann Color site.

About a dozen Sharon Center employees will be moved to other Schulman locations. The other 40 workers from the site will be able to apply for openings at McCann, according to Schulman spokesperson Jennifer Beeman.

Schulman operates almost 140,000 square feet of space in Sharon Center, including a production plant and a color technology center that was commissioned in 1999. The firm also installed a pair of sheet extrusion lines there in 2005 when it planned to enter commercial sheet production with its Invision product. That plan fell short of expectations, and Schulman since has exited that business.

Moving forward, McCann’s North Canton site is a better location for Schulman’s concentrates work, Beeman said.

“Both McCann and Sharon Center were running at about half of capacity,” she added. “But the layout, building and structure of McCann were set up to be a color shop. Sharon Center had been retrofitted as a color shop, so it had limitations on growth.”

The McCann deal comes on the heels of Schulman’s purchase of powder and plastic film concentrate maker ICO Inc. for $191 million. That deal was announced in early December. Schulman was advised on the McCann acquisition by Polymer Transaction Advisors of Newbury, Ohio.

“We’re always looking for further opportunities,” Beeman said. “We’re looking for acquisitions that will help us achieve profitable growth.”

In its 2009 fiscal year — ended Aug. 31 — Schulman posted sales of about $1.3 billion. The firm ranks as one of North America’s 30 largest compounders and concentrate makers, according to a Plastics News estimate.

In the first quarter of its 2010 fiscal year — ended Nov. 30 — Schulman’s profit more than doubled to $17 million, even as sales fell almost 7 percent to about $363 million. On Wall Street, Schulman’s per-share stock price started the year around $21 but was near $24 in late trading March 1.  source plasticsnews.com

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