Zep Acquires Auto Aftermarket Chemical Supplier Amrep

Zep Inc. has acquired Atlanta-based chemical supplier Amrep Inc. for $64.4 million in cash, according to a company press release. Amrep makes maintenance chemicals for the automotive aftermarket, including some detailing and appearance products, as well as the janitorial market. The deal is subject to post-closing working capital adjustments.

Zep is known in the carwash industry for its vehicle cleaning solutions, including prep products, wheel cleaners, presoaks, shampoos, polishes, drying agents and dressings. The company introduced its EnviroEdge line of earth-friendly cleaning products last year.

Zep officials expect the Amrep acquisition to provide approximately $100 million in annualized revenue and believe the purchase will be earnings accretive within the first year. Zep reported 2009 net sales of more than $500 million.

“The acquisition of Amrep is an important strategic step in Zep Inc.’s efforts to utilize distribution to expand its presence in a number of end markets while minimizing channel conflict through the manufacture of both private branded products and national brands,” company officials said.

Zep’s product and brand portfolio will now include Misty, Next Dimension, i-Chem and other Amrep proprietary brands. Amrep will be a wholly owned subsidiary of Zep Inc. and operate as one of Zep’s decentralized divisions.

Officials said the acquisition will give Zep immediate entry into the industrial and institutional distribution channel, a $7.3 billion U.S. market that historically has not been a focus for the company. Amrep’s Automotive Aftermarket Group provides Zep opportunities to accelerate its entry into this market by adding many of the company’s proprietary product formulas to the Amrep product line.

Zep management also said the move will enable the company to enter the U.S.-based Asian OEM market, and officials expect the combination of Amrep’s aerosol manufacturing and Zep’s liquids and powders manufacturing to result in growth of private label product sales to distributors, retailers and other chemical manufacturers.

“The combination of Zep Inc.’s existing product offering with Amrep’s existing customer base and chemical formulations broadens our product line of best-in-class solutions and significantly increases our access to market,” said John K. Morgan, Zep’s chairman, president and CEO.

Amrep will operate as Zep Inc.’s ninth division, with Joe Seladi, Amrep president, reporting to Morgan. Amrep will maintain its current headquarters in Marietta, Ga.

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