OMNOVA Solutions Completes Acquisition of ELIOKEM From AXA Private Equity
Acquisition creates larger, more diverse global specialty chemical and functional surfaces company
OMNOVA Solutions announced that it has completed its acquisition of specialty chemicals manufacturer Eliokem International from AXA Private Equity. OMNOVA paid 227.5 million euros for ELIOKEM, or approximately US$302 million at current exchange rates, before subtracting ELIOKEM's net debt and subject to working capital and capital expenditure adjustments. The Company expects the transaction to be neutral to slightly dilutive to earnings in 2011, but accretive in 2012.
In connection with the acquisition, the Company issued US$250 million in senior notes due 2018, replaced its existing US$150 million term loan with a new US$200 million term loan, and amended and extended its existing revolving credit facility.
"This combination creates a significantly enhanced, more diversified Performance Chemicals business that is well positioned to serve customers on a global basis," said Kevin McMullen, Chairman and Chief Executive Officer of OMNOVA Solutions. "It contributes to all three of our Company's strategic objectives by providing entry into several new higher growth markets, expanding our portfolio of value-added technology solutions and significantly broadening our global manufacturing footprint. Additionally, synergies are expected to provide savings in manufacturing, logistics, purchasing and SG&A by leveraging the resources of an integrated global team.
"Together, with our Decorative Products functional surfaces business, OMNOVA Solutions will be a US$1.1 billion company, based on last twelve months sales through August," McMullen said. "Over 40% of those sales will be outside the United States."
While 75% of ELIOKEM's sales are in product markets that OMNOVA has not previously served, ELIOKEM's business model – including manufacturing process, key raw materials and go-to-market approach – is very similar to OMNOVA's. Focusing on the same basic emulsion polymerization process, the acquisition adds a number of new acrylic, styrene butadiene and nitrile chemistries and applications, including coating resins, elastomeric modifiers, antioxidants, specialty rubbers and reinforcing resins, as well as complementary products for oil field and specialty latex applications.
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