Meanwhile, Lawter will produce, market and sell its varnishes in other global regions. In addition, Lawter will permanently close its LaVergne, TN manufacturing facility.
This is the second notable acquistion that Kustom Group has made in the varnish industry in recent years; the company acquired Var-Chem Products LLC from Sun Chemical in 2010.
Michael E. Gerkin, president and CEO of Kustom Group, said that acquiring Lawter’s varnish business in the Americas adds to Kustom Group’s product offerings for its customers.
“Lawter has been the bellwether of the industry for many decades,” Gerkin added. “So when they approached Kustom about the potential of us buying the varnish business so that they could concentrate on their resin and alkyd business, we were excited about the opportunity. Adding names like Cinergi, Uroset, Luminex, Halex, 100S and A1407, among many others, to Kustom’s stable of products gives us a larger footprint in the North American ink market.”
Aside from adding to Kustom Group’s portfolio of products, Gerkin sees synergies in terms of purchasing.
“As the industry is well aware, the fixed costs and raw materials used to produce a pound of our products has continue to increase,” Gerkin noted. “The best way to control these increases is to increase/maintain your purchasing power as an organization. This acquisition will allow us to realize economies of scale, which will help to minimize the overall effects of these costs, benefiting our customers with greater price stability and uninterrupted supply.”
While the varnish industry has seen its share of challenges in recent years, Gerkin anticipates that the market will stabilize. By adding Lawter’s North American varnish business, Kustom Group is also making a clear statement that the company is in the market for the long term.
“Eventually, the varnish industry will find a floor where the volumes will stop decreasing and will flatten and potentially increase,” Gerkin concluded. “Until that time, the varnish industry will continue to consolidate to right-size itself for the graphic arts market it serves. Kustom Group feels that it is important that our customers understand that Kustom will be here for the long haul. We want to give our customers confidence that their partner, Kustom Group, will be available to them as they deal with future challenges.”