Synalloy expands its specialty chemicals segment with the acquisition of CRI

Synalloy Corporation (Nasdaq:SYNL), a company involved in a number of diverse business activities including the production of stainless steel pipe, fiberglass and steel storage tanks, specialty chemicals, and fabrication of stainless and carbon piping systems, announced the acquisition of the business assets of Color Resources, LLC (CRI) and CRI’s building and land in Fountain Inn, South Carolina. CRI Tolling, LLC, a South Carolina limited liability company and wholly-owned subsidiary of Synalloy, will continue CRI’s business as a toll manufacturer that provides outside manufacturing resources to global and regional chemical companies.
CRI Tolling will operate as a division of Synalloy’s specialty chemicals segment, which includes Manufacturers Chemicals (MC). MC is one of the largest custom chemical formulators and contract manufacturers in the United States. Its principal products include defoamers, surfactants and lubricants, which are used in multiple markets including paper, carpet, textile, metal working, household, industrial and institutional chemicals, petroleum, mining, latex adhesives and agriculture.
The deal was concluded in August. Synalloy purchased the CRI facility built in 1994 specifically for CRI. The plant includes approximately 135,000 square feet of production, warehouse, laboratory and office space. The purchase price for the CRI facility was USD3.45 million.
Synalloy also acquired certain assets and assumed some of the operating liabilities of CRI. The assets included equipment and other assets and approximately USD387,000 worth of inventory and net accounts receivables. The total purchase price was USD1.1 million.
As part of the transaction, CRI President Tony Jones will become vice president of sales for CRI Tolling. Jones will report directly to Greg Gibson, executive vice president of sales and administration at MC and CRI Tolling. Kevin Hrebenar, executive vice president of operations and R&D at MC, will be responsible for these same functions at CRI Tolling.
“A key strategic initiative of our specialty chemicals segment was to acquire or build a second production facility,” said Craig Bram, Synalloy’s president and CEO. “MC has experienced continuous growth over the past five years and we have many opportunities to further penetrate existing markets, as well as develop new ones, including those in the energy industry…. We believe that CRI will be an excellent fit with MC in our specialty chemicals segment and are excited to have Tony continue in a leadership role with CRI Tolling,” said Bram.
Synalloy’s filing with the Securities and Exchange Commission reflects an on-going concern for CRI’s losses in 2012 in excess of USD6.8 million. The majority of these losses were from goodwill impairment and the write-down of customer intangibles by CRI’s owners in 2012.
Over the next 18 months, Synalloy plans to invest an additional USD3.5 million in the CRI facility in order to replicate the production capabilities at its MC Cleveland, Tennessee facility. The second plant will also provide current customers of MC and CRI Tolling with the security of redundant facilities, if it is ever needed. Synalloy will also move its Spartanburg, South Carolina corporate offices to the CRI Facility before the end of the first quarter of 2014.
(August 29, 2013)