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Synthomer Acquires HEXION PAC & Strengthens its Position in Adhesives and Coatings Market

Published on 2016-03-22. Author : SpecialChem

Synthomer plc (LSE:SYNT) ('Synthomer' or the ‘Group’), a leading specialty chemicals company, announces the acquisition of HEXION Performance Adhesives & Coatings (‘HEXION PAC’), a business of HEXION Inc., a global chemical company based in Columbus, Ohio in the USA. The total consideration is $226 million (£156 million*) which is being funded from both existing cash resources and utilization of additional credit facilities. The acquisition is expected to complete during the summer 2016 following receipt of regulatory approvals and satisfaction of other closing conditions.

Synthomer Acquires HEXION PAC
Fig. 1: Synthomer Acquires HEXION PAC

Hexion PAC develops, manufactures and markets a wide array of dispersions, additives, powder coatings and specialty monomers, supplying a global customer base across a broad range of end-use including coatings, adhesives and for building and construction applications. The business employs approximately 750 employees and operates 7 sites across Europe, the USA and Asia. In the year to 31 December 2015, HEXION PAC, generated sales of $370 million and EBITDA of $30 million. At 31 December 2015, HEXION PAC had gross assets of $149 million. It is expected that the acquisition will be earnings enhancing for Synthomer in the first full year. The existing leadership team of Hexion PAC will transfer with the business to Synthomer.

The acquisition of HEXION PAC significantly strengthens Synthomer’s position in the performance adhesives and coatings market, offering access to new product technologies, customers and markets. HEXION PAC is also highly complementary to Synthomer’s existing business both geographically and in the markets in which it operates. Following completion, the Group will have a stronger platform from which to continue its growth aspirations in the Speciality Coatings market. Synthomer expects to achieve approximately $12m of annualized synergies by end 2018 through the integration of HEXION PAC’s businesses into the Group. The estimated costs to achieve the synergies are $9m of restructuring costs and $12m of capital costs.

The purchase price represents a pre-synergy multiple of 7.5x and a post-synergy multiple of 5.4x and the Group’s pro-forma leverage will increase to approximately 1.5x based on the Group’s 2015 year-end numbers.

Calum MacLean, Chief Executive Officer of Synthomer, said: “The acquisition of HEXION PAC represents a further step forward in our strategy to continue to grow and develop the business. This acquisition strengthens our platform for continued growth in the global dispersions and additives market, and in particular expands our presence in the US and Asia. HEXION PAC has a good performance track record and shares our commitment to innovation and emphasis on strong customer relationships. We look forward to welcoming our new colleagues and integrating the business with Synthomer through the remainder of this year.”

About Hexion

Based in Columbus, Ohio, Hexion Inc. (formerly known as Momentive Specialty Chemicals Inc.) is a global leader in thermoset resins. Hexion Inc. serves the global wood and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Hexion Inc. is controlled by investment funds affiliated with Apollo
Global Management, LLC.

About Synthomer

Synthomer develops and markets polymers used in a wide range of industries to create and enhance everyday consumer products. Whether you’re reading a book, opening a pack of breakfast cereals, painting your kitchen, labelling an envelope, laying a carpet, tiling a bathroom or simply driving the car, you could be using a product that has been improved by Synthomer. Synthomer holds positions 1, 2 or 3 in all of our chosen markets and has a proven record to generate added value to its customers through in-depth application know-how and strong R&D support.

Source: Synthomer

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