(Bloomberg) -- Royal Adhesives & Sealants LLC is pursuing deals for niche assets overlooked by market leaders including Henkel AG, as the U.S. company seeks growth opportunities a year after its takeover by private equity firm American Securities.
Potential markets for expansion include aerospace sealants as well as insulation glass and roofing products, Chief Executive Officer Ted Clark said in a phone interview. The company’s sales could reach $650 million this year, he said.
“There’s a number of things in the pipeline,” Clark said. “We tend to do M&A the old fashioned way, and that means going out and visiting people.”
Royal Adhesives’s search for acquisitions comes at a time when Germany’s Henkel has been focused more on beauty and household-care deals, while Bostik SA has been preoccupied with its integration into new parent, Arkema SA of France. Royal Adhesives has made 18 acquisitions since it was founded by Clark and buyout firm Quad C in 2003.
The CEO struck a deal to buy California-based Bacon Adhesives earlier this month for an undisclosed sum, extending the company’s five-year push into the aerospace and defense communications industries. About half of Clark’s acquisitions have been privately arranged deals, as opposed to submitting a bid in an auction process, the executive said.
The purchase of Bacon highlights Royal Adhesives’ push into specialized markets with higher barriers of entry and technical needs. While specialized markets can offer increased profit margins, scale is also key in order to buy raw materials in bulk at improved prices, said Clark. Prior to Royal Adhesives, the CEO ran a division of Courtaulds Plc that was the world’s leading aerospace sealants supplier.
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