aHF Products’ $107 million purchase of Armstrong Flooring was finalized on July 26, bringing to close a tenuous period of negotiations over the past few weeks. The decision to purchase certain assets of Armstrong Flooring keeps the venerable, century-old brand viable while simultaneously bolstering AHF’s burgeoning portfolio. Assets include three US manufacturing facilities—in Lancaster and Beech Creek, Pa., and Kankakee, Ill.—as well as intellectual property, patents and inventory.
“We bought part of the business that we thought we could improve,” Brian Carson, president and CEO of AHF Products, told FCNews.
Without AHF Products’ 11th hour intervention, Armstrong Flooring likely faced liquidation and the loss of hundreds of jobs as bankruptcy court records indicated that no other bidder was interested in keeping the company operating as a going concern. Gordon Brothers, which joined AHF in the deal, will be responsible for selling off production facilities in Jackson, Miss., and Stillwater, Okla.
An issue over the use of the “Armstrong” name briefly held up the deal as Armstrong World Industries objected to AHF Products being given rights in North America to use the Armstrong name and trademarks after the sale. (Armstrong Flooring and Armstrong World Industries both used the Armstrong name on its products.) However, a Delaware bankruptcy court judge dismissed Armstrong World Industries’ arguments, saying the company hadn’t formally objected in time to the sale of Armstrong Flooring, which included the rights to the storied name.
With this purchase, AHF expands its portfolio to 14 brands. Furthermore, it now operates 11 manufacturing facilities—10 in the US and one in Cambodia—and four domestic distribution facilities to serve customers through a multi-channel strategy that includes dealers, home centers and distributors around the world.
It also continues a busy acquisition spree for AHF Products, which previously acquired LM Flooring in 2019, followed by Parterre Flooring and American OEM in 2021. The Armstrong Flooring assets and brand license is the latest for AHF Products as it continues to grow both organically and through acquisition, continuing a strategy of serving customers through sought-after products, service and innovation, according to Carson.
“We have seen incredible growth since our inception in 2019, and we are thrilled to be adding the venerable Armstrong Flooring brand to our powerful portfolio,” he said. “AHF is primed to benefit from a strong, long-term outlook in both residential repair and remodel spend and new residential housing construction, and the benefits afforded by our strong domestic manufacturing capabilities. This purchase also significantly increases our position in the commercial flooring segment, which is expected to grow.”
Ties that bind
The link between the companies runs deep. AHF Products began as a 2018 spinoff of Armstrong Flooring’s wood flooring business. Carson, meanwhile, is a former 16-year executive for Armstrong World Industries, which spun off Armstrong Flooring in 2016. He was also plant manager at Kankakee. Several other AHF personnel also cut their teeth at Armstrong, including Jennifer Zimmerman, AHF general counsel, who took an active role in the Armstrong acquisition. She started at Armstrong in 2008 and came over in the carve out.
“You don’t know what opportunities will be presented to you,” she told FCNews. “Armstrong is a really strong brand, an important brand. Everyone here wanted the brand to continue because we were all part of it. It’s important for us to see it continue.”
AHF would not say how many people might be displaced in the transaction. As of May, Armstrong Flooring had 606 employees in Lancaster County, which included about 390 who were assigned to the company’s Greenfield headquarters and R&D center. Some former Armstrong Flooring employees have already started working for AHF Products. AHF Products told Lancasteronline.com that more than 90% of the 200-plus employees at Armstrong Flooring’s Dillerville Road plant will stay. However, Carson has said AHF Products won’t be using Armstrong Flooring’s former Greenfield locations. Some of those employees may move to AHF Products headquarters in West Hempfield Township, but most will not be needed, Carson said.
Carson told FCNews the company would be hiring people for the Kankakee and Lancaster plants as well in sales and headquarters positions that are necessary to enhance its current operations. “We do have need, we just don’t have as many needs,” he noted.
While acknowledging that Armstrong “had challenges,” Carson said the goal here is to “carve the business out, stand them up, get them profitable and grow them.” The work also entails switching over Armstrong computer systems to AHF’s and aligning product names with item numbers to seamlessly transition ordering and shipping to AHF systems. “Our team is working 24/7, including weekends,” Carson said. “We have heavy lifting to do to stand this up. It might be a little clunky for awhile but it’s essential that we get this business to be profitable.”
The acquisition brings into AHF’s fold signature products and innovations from Armstrong such as Diamond 10 technology, a patented process that uses cultured diamonds to provide scratch, stain and scuff resistance, and Medintech, a high-performance homogeneous sheet flooring product. The technology will be used in Armstrong products as well as in AHF brands.
“It’s our responsibility to make this work,” Carson explained. “It’s important to folks in the plant and it’s important for our distributors and retailers. This is the best outcome for everybody given where the [Armstrong] business found itself. We want this to be an exciting story.”
Impact on distributors
Nearly half of the top 20 flooring distributors have an existing relationship with either AHF Products or Armstrong Flooring. Two distributors reached by FCNews declined comment or said it was premature to ascertain the full scope of the purchase as details were still being sorted out.
However, Armstrong distributor Tri-West Ltd., Santa Fe Springs, Calif., said it put together a backup plan with AHF Contract assuming there would be no Armstrong in the future. “As it turned out, we are well set with a full AHF commercial sheet assortment and now we’ll continue selling Armstrong VCT,” said Dave White, vice president of sales and marketing. “We have had residential products in place for years, so no real impact there. We are looking forward to an exciting future with AHF Contract and the realignment.”
Comments are closed.