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Frequently Asked Questions
Customers/Suppliers
- How will the merger benefit me as a customer?
We believe that the merger of A. Schulman and ICO will provide our customers with the same quality products and top-notch service our customers expect as well as the benefit of enhanced technologies, broader product capabilities and greater resources that will allow our customers to succeed in the marketplace.
- Will my supply of product be affected?
No immediate changes will occur to any processes relating to the supply of product as a result of the merger. The levels of quality, availability and lead-time that you have come to expect will not change. The same holds true for the production location of your products. Bringing A. Schulman and ICO together presents many opportunities to service our customers even better. Over time, there may be improvements to our processes that increase our ability to service our customers. In such an event, rest assured that the company and your salesperson will communicate with you in a clear and timely manner.
- Will my pricing change?
No changes to customer pricing will occur as a result of the merger. Going forward, pricing changes will occur based solely on market conditions. For pricing tied to a formal agreement, pricing adjustments will continue to occur as defined in the agreement until the agreement expires.
- How will my supply agreement(s) be affected?
Any current agreement that is mutually acknowledged (by seller and buyer) will be honored through its term as defined in the agreement.
- Will my salesperson change?
You will continue to work with your current salesperson. By way of bringing the companies together, where there is overlap in supply (A. Schulman and ICO products), a plan will be developed and communicated to you over the coming weeks, ensuring that the best possible service is provided.
- How will I submit and track my orders going forward?
The current processes for submitting, tracking and communicating on your orders will not change at the time of the merger. Over time, there may be improvements to our processes that will increase our ability to service our customers. In such an event, rest assured that the company and your salesperson will communicate with you in a clear and timely manner.
- Will my credit limit and/or payment terms change? Will the payment submission process change?
Credit limits, payment terms and payment submission processes will remain the same at this time. As integration of accounts receivable evolves, changes will be communicated to ICO customers.
- How will I obtain access to quality and regulatory documents/information going forward?
Continue to work through your current channels to obtain any required information with regard to quality and regulatory type documents/information. Should any changes to any of these processes occur, rest assured that the company and your salesperson will communicate with you in a clear and timely manner.
- What should I expect as a supplier?
We see this combination of our businesses as providing opportunities for our suppliers based on:
- Being a reliable manufacturer with a strong financial position and excellent liquidity
- Having an expanded footprint with additional facilities with Asia, Latin America, Europe and North America
- Being a larger entity with a greater opportunity to bring new material and products for evaluation. We want to be the customer of choice for our suppliers.
- How will purchasing be handled?
We will honor existing contracts executed prior to the close. We are beginning to evaluate the opportunities to grow our businesses with our key suppliers as well as identify/evaluate and develop new sources of supply for the combined entity.
General
- Why did A. Schulman acquire ICO, Inc.?
A. Schulman’s strategic objectives include being the leading global manufacturer in both masterbatch and rotomolding, and the acquisition of ICO, Inc. advances A. Schulman’s position in these two important growth areas. ICO has a notably large global production footprint in rotomolding. Furthermore, we believe that our business will benefit from ICO’s experience in particle size reduction. In the area of masterbatch, the A. Schulman and Bayshore enterprise will specialize in highly-filled concentrates and functional additives that are positioned to offer complete solutions at any level to serve the film and packaging markets. There are also opportunities to share and leverage both organizations’ knowledge and manufacturing technology, and, finally, the combined organization has opportunities to expand A. Schulman’s distribution presence.
- Who is ICO, Inc.?
Based in Houston, Texas, ICO produces custom polymer powders for rotational molding and other polymer segments, including textiles, metal coatings and masterbatch. ICO is an industry leader in size reduction, compounding and other tolling services for plastic and non-plastic materials.
- What is the strategic fit between A. Schulman and ICO?
Our two businesses are extremely complementary across markets, product lines, and geographically around the world. The addition of ICO’s masterbatch and rotomolding facilities to A. Schulman’s facilities, specialty products and technical capabilities, along with our other combined skill sets, will strengthen our ability to serve customers. ICO will allow us to increase our presence in the U.S. masterbatch market, and gain plants in the high-growth markets of Brazil and Australia while adding another facility in Asia to bring our total plants in that region to four, including the facility we plan to build in India. In Europe, we will also expand our presence and add rotomolding and size reduction to our capabilities.
- How important is rotomolding to A. Schulman’s future?
One of our strongest core competencies is in developing compounded resins for rotationally molded products such as gas and water tanks, kayaks, playground equipment and other large applications. We have developed the technical capability and are committed to a robust product development pipeline. Expanding our ability to serve this market, both technically and geographically into the markets of Europe, Latin America and Asia, is critical to our success, and a key component of our interest in ICO.
- What significance does ICO’s expertise in size reduction hold for A. Schulman?
ICO is the global leader in size reduction technology, which is used to grind compounded resins into fine, custom plastic powders for rotational molding and other specialty markets. These unique materials can offer a variety of high-performance attributes, including good adhesion between the polymer matrix and fiber reinforcement, excellent toughness, and superior hydrocarbon and flame resistance. Demanding applications include water storage, toys, aerospace, automotive, sporting equipment, marine, and construction.
- How will ICO be integrated into A. Schulman’s business?
We have created a cross-functional integration team led by experienced members of both ICO and A. Schulman’s management to coordinate all integration activities. These activities will be supported by outside experts as needed. Integration plans were developed by all business and functional leaders and are designed to begin upon close.
- What does this mean for the customers of both companies?
The two companies believe this transaction will bring significant value and opportunity to the customers of the combined business as a result of:
- Enhanced and complementary product offerings
- Expanded global reach
- A financially stronger global supplier going forward
- Shared technology and product development focused on better solutions for customers
- Is A. Schulman considering other acquisitions?
The improvements A. Schulman has made to its operations and balance sheet during the past two years have strengthened its financial position to allow it now to invest in strategic acquisitions. The Company continues to seek acquisitions that would provide the highest impact for the business, generate maximum return on invested capital and create additional shareholder value, and, most importantly, support the Company’s strategic objectives while preserving our financial strength.
- How will this transaction impact the geographic mix of A. Schulman’s business?
ICO’s masterbatch and rotomolding facilities in North America, South America, Europe and the Asia-Pacific region are largely complementary to A. Schulman’s existing operations and will greatly expand A. Schulman’s ability to serve customers in those markets. For example, the ICO acquisition will enable A. Schulman to expand its footprint in Australia, Brazil, Malaysia and European countries such as France, Italy and Holland. At the same time, A. Schulman’s existing operations in Hungary, Poland, Sweden and Turkey will be able to introduce ICO’s size reduction and rotomolding capabilities into those fast-developing markets.
Approximately two-thirds of ICO’s revenues are derived from Europe, Asia and South America, while nearly three-fourths of A. Schulman’s revenues come from outside North America.
- What is the total cost of this transaction?
Under the terms of the agreement, the total consideration received by ICO shareholders is approximately $235 million, with the value based on A. Schulman’s April 30, 2010, closing stock price of $26.01 per share. The formula-driven value per share of this transaction is approximately $8.37 per ICO share based on the April 30 closing value of the A. Schulman common stock. ICO, Inc. shareholders will receive a combination of $3.64 in cash and .181816 A. Schulman shares in exchange for each ICO share.
Forward-Looking Statements
Certain statements in this release may constitute forward-looking statements within the meaning of the Federal securities laws. These statements can be identified by the fact that they do not relate strictly to historic or current facts. They use such words as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. These forward-looking statements are based on currently available information, but are subject to a variety of uncertainties, unknown risks and other factors concerning the Company's operations and business environment, which are difficult to predict and are beyond the control of the Company. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company's future financial performance, include, but are not limited to, the following:
- Worldwide and regional economic, business and political conditions,
including continuing economic uncertainties in some or all of the
Company's major product markets;
- Fluctuations in the value of currencies in major areas where the Company
operates, including the U.S. dollar, Euro, U.K. pound sterling, Canadian
dollar, Mexican peso, Chinese yuan and Indonesian rupiah;
- Fluctuations in the prices of sources of energy or plastic resins and
other raw materials;
- Changes in customer demand and requirements;
- Escalation in the cost of providing employee health care;
- The outcome of any legal claims known or unknown;
- The performance of the global auto market;
- The global financial market turbulence; and
- The global or regional economic slowdown or recession.
Additional risk factors that could affect the Company's performance are set forth in the Company's Annual Report on Form 10-K. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company's business, financial condition and results of operations.
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