Hillenbrand acquires food processing equipment business for $730M

Batesville, Indiana-based Hillenbrand Inc. on Wednesday announced plans to acquire the Kansas City, Missouri-based Food and Performance Materials business, or FPM, of Schenck Process in a $730 million deal.

FPM designs, manufactures, and services a variety of industrial food processing equipment and employs 1,300 people globally.

Schenck Process is headquartered in Germany and was acquired by New York-based investment firm Blackstone Inc. in 2018.

When the deal is completed, Hillenbrand said FPM will join its Advanced Process Solutions segment, and the company expects FPM to generate $540 million in revenue in 2023.

During a conference call Wednesday morning, CEO Kim Ryan said the acquisition creates a more robust portfolio of processing technologies for Hillenbrand.

“FPM brings leading weighing, feeding and filtration capabilities, among others, that will allow us to expand and optimize the comprehensive solutions we provide,” Ryan said. “FPM is a leading provider of pet food processing systems in North America, and expands our presence across a number of other key customer applications, including baked goods and other processed foods, as well as chemicals and engineering plastics.”

Hillenbrand said it will use cash on hand and cash available under its revolving credit facility to fund the acquisition.

The company said it has identified about $20 million in cost synergies through the integration of FPM, though it was not immediately clear if any jobs would be negatively affected by the deal. The acquisition expected to drive double-digit return on investment capital after five years.

The acquisition is expected to close in Hillenbrand’s fiscal fourth quarter of 2023. The deal remains subject to regulatory approvals and customary closing conditions.

The FPM deal is the latest in a series of acquisitions that Ryan said will position Hillenbrand for long-term growth through a balanced portfolio of short cycle, mid cycle and long cycle equipment, as well as its aftermarket business.

“The acquisitions we’ve made over the past 12 months have improved this balance by further expanding our presence in food and recycling, which are markets we believe will be less cyclical and have relatively higher long term growth profiles,” Ryan said. “The addition of FPM enhances our profile by increasing our exposure to the attractive food end markets while also growing our aftermarket opportunity.”

Among the company’s previous acquisitions were the Peerless Food Equipment division of Illinois Tool Works Inc. in December and Germany-based recycling equipment manufacturer Herbold Meckesheim GmbH last July.

Ryan said Hillenbrand’s $761 million sale of the former Batesville Casket Co. to Connecticut-based LongRange Capital has also contributed to the company’s growth strategy.

“With the divestiture of our legacy death care business, we created a pure play industrial company with a strong presence in attractive and markets such as durable plastics, food and recycling, which are underpinned by long term secular growth trends,” she said.