Hillenbrand buys Schenck Process division for $730M

The transformation continues for Batesville, Ind.-based Hillenbrand Inc., which acquired industrial equipment maker Schenck Process Group's Food and Performance Materials (FPM) business for $730 million to increase its scale in the food, plastics and chemicals end markets.

Based in Kansas City, FPM produces processing equipment and systems for feeding, filtration, baking and material handling at facilities in the United States, United Kingdom, Thailand and Brazil that employ about 1,300.

About 65 percent of FPM sales are to the food market — almost half of that to pet food — with the balance related to chemicals and performance materials.

"While these markets may seem dissimilar, they actually share a common backbone of similar products, technology and processing requirements," Hillenbrand President and CEO Kim Ryan said in a May 24 conference call about the company's fourth acquisition since June 2022.

FPM, once a portfolio company of Blackstone, is expected to generate $540 million in sales for calendar year 2023, which would push Hillenbrand sales up to about $3.3 billion with more than 25 percent from the food and recycling markets.

Hillenbrand has been expanding in those markets, buying food extrusion equipment provider Gabler in June 2022, followed by plastics recycling equipment provider Herbold in September, mixing and automation provider Linxis Group in October, and then food processing equipment provider Peerless in December.

It has owned injection molding machinery maker Milacron since 2019.

Also in December, Hillenbrand announced it was selling its Batesville burial and cremation subsidiary to an affiliate of private equity firm LongRange Capital for $761.5 million.

"Over the last 12 months, we've divested our legacy death care segment, and acquired high-quality industrial businesses that serve large, attractive end markets that are underpinned by long-term, secular growth trends," Ryan said. "These actions have significantly transformed Hillenbrand into a global leader in highly engineered, mission-critical industrial processing solutions."

FPM equipment complements Hillenbrand's Advance Process Solutions (APS) business segment, particularly the brand lines of Coperion for pellet production and Linxis for ingredient processing.

"This will enable us to drive additional scale benefits across numerous key functions, such as engineering, manufacturing and procurement, while also creating enhanced value for our customers through a more comprehensive offering," Ryan said.

Another 30 percent of FPM sales are generated from a profitable, recurring after-market parts and service business.

"We're excited to be able to build additional scale in this attractive stable part of our business," Ryan said.

Hillenbrand officials also identified $20 million of expected cost synergies across administrative and manufacturing operations with FDM, which has employees primarily in the U.S. and United Kingdom.

At times, Hillenbrand and FDM have been customers of one another, Ryan also said, noting FDM is focused more on feeding and material handling while Hillenbrand has a large footprint in mixing and extrusion.

"Many of our systems have filtration capabilities and they are one of the providers we purchase from. Sometimes they need extrusion or mixing capabilities and they may outsource some of the pieces and parts of those systems to us. You can see how that might come together," Ryan said.

FDM also will be to take advantage of Hillenbrand's global shared services for finances, information technology, supply management and engineering.

"We see additional upside on the commercial front through cross selling opportunities and further market expansion," Ryan said.

Schenck Process Group CEO Keith Cochrane said Hillenbrand will make a good home for FPM.

"After the sale of our mining business to Sandvik last year, the sale of our Food and Performance Materials business to Hillenbrand marks the last step in setting up three distinct and standalone businesses. Following the completion of this transaction, Schenck Process will continue to be a leading provider of process solutions for mission critical applications with a focus on the EMEA and Asian markets providing customers with a unique combination of individual products, smart solutions, and deep application know-how across a number of end markets including infrastructure, chemicals and plastics," Cochrane said in a news release.

Jay Brown, president of the FPM business, added: "As part of Hillenbrand's Advanced Process Solutions segment, our existing offerings will be strengthened and will accelerate growth in key industries and markets around the world. The Schenck Process Food and Performance Material business leadership team could not be more pleased."

The deal is expected to close during Hillenbrand's fiscal fourth quarter, which ends Sept. 30.

In addition to APS, Hillenbrand has a Molding Technology Solutions (MTS) segment selling Milacron, Mold Masters and DME brand machines and equipment.

Schenck Process Group, parent to the FPM business, is headquartered in Darmstadt, Germany.

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