DMC Global to Acquire 60 Percent Controlling Interest in Arcadia Inc.

DMC Global Inc., a diversified holding company, signed a definitive agreement to acquire a 60 percent controlling interest in privately held Arcadia Inc. for $282.5 million in cash and DMC stock. Arcadia is a U.S. supplier of architectural building products, which include exterior and interior framing systems for low and mid-rise commercial buildings. Closing is expected to occur prior to Dec. 31, 2021

Arcadia CEO Jim Schladen says, “This is an exciting transaction for Arcadia, its employees and our customers. We look forward to DMC’s support as we expand Arcadia’s capacity and increase its position in the commercial and high-end residential architectural products markets. I am confident this will be an outstanding partnership that will provide long-term benefits to Arcadia, DMC, and our stakeholders.”

Kevin Longe, DMC’s president and CEO, says, “This is a milestone transaction for DMC and aligns with our strategy of building a diversified portfolio of industry-leading businesses with differentiated products and services. The acquisition of Arcadia will double DMC’s consolidated sales, strengthen our gross margins and provide diversification outside our more cyclical energy and industrial infrastructure markets.

“Arcadia’s strong position in a $4.5 billion segment of the architectural products industry will also significantly expand DMC’s addressable market. We look forward to supporting Arcadia’s growth plans, and I am delighted to welcome CEO Jim Schladen and the company’s 850 employees to the DMC family.”

Transaction details

• DMC will purchase a 60 percent interest in Arcadia for $282.5 million, subject to final purchase price adjustments and closing conditions  
• $262.0 million of the purchase price to be paid in cash and $20.5 million will be paid in DMC stock
• Cash portion to be financed with cash and marketable securities on DMC’s balance sheet and funds from a $150.0 million senior credit facility 
• DMC’s total debt-to-adjusted EBITDA leverage ratio after closing will be 2.79 based on total borrowings of $150.0 million and pro forma adjusted EBITDA of $53.7 million; total net debt-to-adjusted EBITDA leverage ratio will be 2.25 based on net debt of $120.8 million and pro forma adjusted EBITDA of $53.7 million
• DMC to acquire the remaining 40 percent interest in Arcadia through a three-year put and call option with a floor valuation of $187.1 million
• Total implied transaction value is $469.6 million  
• Transaction value is 8.6x Arcadia’s trailing 12-month adjusted EBITDA of $54.6 million as of Sept. 30, 2021