Myers Industries, Inc., a manufacturer and distributor of industrial products, has announced that it has completed its acquisition of Signature Systems, which was previously announced on January 2, 2024.
“We are excited to welcome the Signature team to Myers with the closing of this transaction,” said Mike McGaugh, Chief Executive Officer of Myers Industries. “This acquisition strengthens our growing portfolio of market-leading brands, enhances our profitability profile, and demonstrates Myers’ capability as a platform for acquisitive growth. With a strong runway of future growth, due to increasing infrastructure investments over the next decade, we believe Signature’s sustainable competitive advantage, strong earnings growth, and free cashflow profile will help us accelerate EPS growth and achieve our long-term strategic objectives.”
The cash transaction of $350 million was funded through an amendment and restatement of Myers’ existing loan agreement, which maintained a $250 million revolving credit facility and added a new $400 million 5-year senior secured term loan A (collectively, the “Loan Agreement”). The term loan A was increased by $50 million from the amount initially contemplated. These combined senior secured loan agreements enhance Myers’ overall liquidity profile and capacity for future potential acquisitions. Pro forma for the acquisition, the Company’s net leverage ratio is approximately 3.0x, which is within management’s target range. The financial results of Signature Systems are expected to be included within Myers’ Material Handling segment.
Chief Financial Officer Grant Fitz commented, “As mentioned in January, this transaction is expected to be neutral to slightly dilutive to US GAAP EPS in fiscal year 2024, and we anticipate Signature will deliver EPS accretion of $0.20 to $0.30 in 2025 and $0.40 to $0.50 in 2026 with additional meaningful EPS accretion beyond 2026. We also expect annualized run-rate operational and cost synergies of $8 million to be fully captured by 2025 with additional synergies to be realized once Signature has an opportunity to leverage the Myers Business System. Excluding other potential opportunities that may come forward, we anticipate using the free cash flow generated from the combined Myers and Signature company to allow Myers to reduce the net leverage ratio below 2.0x within two years of the closing of this transaction.”
Moelis & Company LLC served as the exclusive financial advisor to Myers concerning the transaction, while Vorys, Sater, Seymour, and Pease LLP and Davis Polk & Wardwell LLP provided legal counsel. William Blair & Company LLC served as exclusive financial advisor and Honigman LLP served as legal counsel to Signature. The Loan Agreement was led by J.P. Morgan Chase, U.S. Bank National, Wells Fargo Bank and KeyBank National.
