Elementis sells Global Pigments Business
Elementis plc announced that it has agreed to sell its Global pigments business headquartered in East St. Louis, USA, to Rockwood Specialties Group, Inc. for a cash consideration of approximately US$140 million (£70 million) on a cash free, debt free basis.
Elementis Pigments is a producer of synthetic iron oxides and complementary products. In the year ended 31 December 2006, Pigments' reported operating profit, before exceptional items, was £6.1 million on sales of £94.2 million with net assets of approximately £42 million, excluding cash and debt. Gross assets were approximately £61million. After taking account of transaction costs and estimated net assets at the time of completion, Elementis expects to record a pre-tax gain on sale of approximately £20 million. This gain will be recorded as an exceptional item in the 2007 financial statements.
The price represents an attractive multiple of 2006 operating profit (earnings before interest and tax) of 11.5 times. In addition, the transaction is expected to have no material impact on the Group's 2007 earnings before exceptional items, and provides an opportunity to further strengthen the Group's balance sheet to support growth in the Specialties business.
Completion is subject to regulatory approvals, including a filing under the Hart Scott Rodino Act in the United States, and is expected to take place before the end of 2007. Net proceeds from the sale will initially be used to reduce net borrowings, but the Board is reviewing other potential uses and will provide an update before completion.
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