Britain’s Avon Rubber plc on Wednesday said it has agreed to acquire the U.S.-based ballistic protection business of 3M Corp. [MMM] for $91 million in cash, a deal that complements its respirator business and positions it in the U.S. defense market.

Terms of the deal include a $25 million earn out provision based on the success of pending tenders and is expected to close in early 2020 subject to U.S. regulatory approvals.

3M’s ballistic protection business is part of the former Ceradyne Inc. that the company acquired in November 2012 for $860 million (Defense Daily, Oct. 2, 2012). Ceradyne then had annual sales of around $500 million.

3M is retaining the technical ceramics, specialty additives, thermal and fused silica, and stable isotopes from its Ceradyne acquisition, a company spokesman told Defense Daily.

The business being acquired by Avon Rubber still carries the Ceradyne brand, has about 280 employees, and had $85.4 million in sales in 2018, with 90 percent of the revenue from sales to the U.S. Defense Department. Law enforcement customers made up 6 percent of sales last year and international military customers 4 percent. 3M’s ballistic protection business also had $10.8 million in earnings before interest, taxes, depreciation and amortization.

The ballistic protection business consists of advanced combat helmets, which accounted for 58 percent of sales last year, body armor, 33 percent of sales, and flat armor, 9 percent of sales. Flat armor is primarily sold to protect underneath seats and key systems of rotary and fixed-wing military aircraft.

3M body armor vest and plates. Photo: 3M

In addition to expanding its U.S. presence and its product portfolio, Avon Rubber believes the deal will allow it to leverage its existing international sales infrastructure to increase sales of the Ceradyne brand ballistic protection products to military and law enforcement customers worldwide, Paul McDonald, Avon Rubber’s CEO, said on an analyst call on Wednesday morning.

Eventually, Avon Rubber expects to do more integration work related to the advanced combat helmets, which already feature integrated communications, by combining them with the company’s respirators, McDonald said.

3M’s ballistic protection operations include three manufacturing facilities in the U.S. as well as research and development capabilities.

In March, 3M’s Ceradyne subsidiary was one of three companies selected by the Army to compete for orders to deliver lightweight body armor plates under a potential $704 million contract (Defense Daily, March 7). The other two awardees for the Enhanced Small Arms Protective Insert and X-Small Arms Protective Insert hard armor plates were Leading Technology Composites and TenCate Advanced Armor USA.

The lightweight armor plates are part of the Army’s Soldier Protection System (SPS), an integrated head-to-toe personal protection system for soldiers. Ceradyne’s combat helmets are also part of SPS.

Work under the SPS will provide Avon Rubber with medium-term growth, McDonald said.

Avon Rubber had about $201 million in sales in 2018. The company expects to achieve $5 million in recurring annual cost synergies with the acquisition.

Avon Rubber also provides the DoD with the Joint Service General Purpose Mask. The company’s masks and filters are used for chemical, biological, radiological and nuclear protection.

3M said the divestiture of its ballistic protection business is part of an ongoing portfolio reshaping and will allow it to focus on other businesses within its Advanced Materials Division.

3M’s financial adviser on the deal is William Blair. Avon Rubber is being advised by Rothschild & Co.