Private equity firm Apollo Management (New York) says it has agreed to acquire OM Group for about $1.03 billion, or $34/share. Apollo will then sell OM Group’s electronic chemicals and photomasks businesses to Platform Specialty Products (Miami) for about $365 million, while retaining control of the company’s magnetic technologies, battery technologies and advanced organics businesses. Both transactions are expected to close by the end of this year.
The purchase price for OM Group represents a 28% premium on the company’s share price as of 29 May, and a multiple of 9.5 times (x) OM Group’s expected Ebitda over the next twelve months. The businesses Platform will acquire generated $28 million in Ebibta in 2014. Platform expects to realize $20 million in cost savings over the next two years by combining the businesses with its former MacDermid business.
“Last year, we launched a comprehensive review of strategic alternatives, resulting in our Board of Directors unanimously concluding that this acquisition of the company is the best course of action to maximize value for OM Group stockholders,” says Joseph Scaminace, chairman and CEO of OM Group. Apollo and Platform will bring forth “significant financial resources” to help grow the businesses, Scaminace adds.
The deal includes a 35-day “go-shop” period, during with OM Group’s board will actively solicit and consider other acquisition proposals.
Platform acquired MacDermid for $1.8 billion in 2013. The business, which reports earnings as Platform’s performance applications segment, has a major presence in the electronic and printing chemicals markets. “Acquiring highly-synergistic businesses is a core component of our growth strategy,” says Platform CEO Daniel Leever. Platform is a blank-check firm founded by former Jarden executive Martin Franklin. It runs a multi-billion-dollar agricultural chemicals business in addition to MacDermid.
Apollo is among the major private equity investors in the chemical industry. The firm’s current investments include controlling stakes in Momentive and Hexion, and previous investments include LyondellBasell and Taminco
The OM Group acquisitions are subject to customary closing conditions, including a Hart-Scott-Rodino waiting period in the US.
By Vincent Valk