Chinese manufacturer of high-value industrial tapes is key supplier to global automotive industry
GLENDALE, Calif. - Avery Dennison today announced it has agreed to acquire Yongle Tape Company Ltd., a manufacturer of specialty tapes and related products used in a variety of industrial markets, including the global automotive industry. Yongle Tape will be acquired from the company’s management and private equity firm ShawKwei & Partners for the purchase price of $190 million, subject to customary adjustments, with additional earnouts of up to $55 million to be paid based on the achievement of certain performance targets over the next two years.
Headquartered in China’s Hebei Province, with production facilities in Zhuozhou and Shanghai, Yongle Tape is China’s leading manufacturer of cable harnessing and insulation tapes. The company is a key supplier to both Chinese and global automakers, with a portfolio of high-value products that are specified by the automotive OEMs and their Tier suppliers.
Over its 32-year history, Yongle Tape has built its strong market position with high quality products, competitive pricing, and regular investment in product innovation. Last year, the company generated revenue of an estimated RMB¥1.1 billion, or approximately $160 million.
“With its well-regarded products and extensive customer relationships, Yongle Tape is an excellent strategic fit with our company and a strong partner for our growing business in industrial materials,” said Mitch Butier, Avery Dennison president and CEO. “This acquisition advances our strategy to expand our global capabilities, while accelerating our growth and increasing our scale in the high-value industrial materials and healthcare segments.”
“Yongle Tape will build on our position in the global automotive sector and strengthen our overall product offerings with a range of industrial customers,” added Mike Johansen, vice president and general manager of Avery Dennison’s Industrial and Healthcare Materials businesses. “And with its solid foundation and strong legacy of growth, Yongle Tape will be an excellent fit with our global tapes and fastener businesses—we see many attractive opportunities to innovate and expand the existing product range and customer base of both organizations.”
“Avery Dennison and Yongle Tape share a strong commitment to service and continuous innovation,” said Yongle Tape Chairman Wong Fung. “Avery Dennison brings significant technical and R&D capabilities to this union which will accelerate our product development at Yongle Tape, while its global distribution networks will open new growth opportunities for the Yongle Tape portfolio in Europe and North America.”
“Chairman Wong and the management team have built an outstanding business servicing leading customers around the world,” said Kyle Shaw, a director of Yongle Tape and the Managing Partner of ShawKwei & Partners. “It has been a rewarding journey the past several years participating with them in the development of Yongle Tape into a leading pressure-sensitive wire harnessing tape manufacturer.”
The acquisition is expected to close in mid-2017, subject to customary conditions and regulatory approvals. The company expects the acquisition to have an immaterial impact on earnings per share in 2017. Avery Dennison will fund the acquisition with existing cash and credit facilities.