LyondellBasell Industries has reached to acquire A. Schulman for $2.25 billion, significantly expanding its compounding business.
The $42/share purchase price represents an 8.7% premium to Schulman’s closing price on 14 February and values Schulman at 11.0 times last-twelve-months adjusted EBITDA.
LyondellBasell says the deal will create an “industry-leading compounding business” with combined revenue of $4.6 billion/year and adjusted EBITDA of $446 million over the last 12 months. LyondellBasell says the addition of Schulman broadens its existing polypropylene (PP) business by adding colorants, masterbatches, powders, and engineered composites to its portfolio.
Schulman’s business also provides LyondellBasell’s compounding business, which had been focusing on automotive, entry into packaging, building and construction, electronics and appliances, and agricultural markets. “The expanded business is well positioned to compete in attractive end markets that are growing above GDP,” LyondellBasell says.
The $4.6 billion sales figure consists of LyondellBasell’s 2017 PP compounding sales of $2.1 billion and Schulman’s revenue of $2.5 billion for the year ended 30 November. The EBITDA figure represents LyondellBasell’s 2017 PP compounding earnings of $241 million and Schulman’s adjusted EBITDA of $205 million for the year ended 30 November.
The deal has been approved by the LyondellBasell and Schulman boards, subject to customary closing conditions, and is expected to close in the second half of 2018. LyondellBasell expects to capture $150 million in run-rate cost synergies within two years.
By Ian Young
Source: Chemical Week
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