Oct 19 2010
HEXPOL has entered into an agreement to acquire global rubber compounding group Excel Polymers LLC.
- HEXPOL (STO:HPOLB) acquires Excel Polymers, a global rubber compounding group.
- Cash purchase price of 212,5 MUSD on a cash and debt free basis. The purchase price will be paid upon completion of the acquisition which is estimated to occur at the end of November 2010.
- The acquisition will further strengthen HEXPOL’s position as a world leading polymer materials compounding group. Significant synergies are expected to arise from the transaction especially on the cost side.
- The acquisition is fully financed via bank facilities. HEXPOL intends to pursue a rights issue corresponding to approximately 550 MSEK as soon as practically possible following completion of the acquisition.
Description of Excel Polymers
Excel Polymers is a leading global supplier of performance elastomer solutions, offering a comprehensive portfolio of compounded polymer materials, performance additives and value added services to rubber parts manufacturers.
Excel Polymers has an extensive breadth of compounding capabilities and the global production footprint consists of eight manufacturing facilities strategically located in the US, China, Mexico and United Kingdom.
The company offers formulations and products to a diversified group of end markets including general industrial, contruction, automotive, printing, heavy machinery, oil&gas and consumer.
Excel Polymers is expected to report sales of approximately 350-360 MUSD and EBITDA of approximately 34-35 MUSD in 2010.
Excel Polymers is headquartered in Solon, Ohio, USA and employs approximately 800 people in the US, Mexico, UK and China. In 2009, sales amounted to 284 MUSD and EBITDA to 21 MUSD.
Background and reasons for the transaction
With the transaction HEXPOL will be the leading global rubber compounding group with expertise and manufacturing presence in 9 countries with 24 manufacturing entities.
“With the acquisition of Excel Polymers we are improving our capabilities and manufacturing footprint in order to service our customers on global reach. Our customers will experience the combination of global reach and local personalized service as we reinforce our theme “think globally, act locally”. We are excited about the enhanced technology resources, capabilities and competences.” says HEXPOL CEO Georg Brunstam.
The transaction in brief
Completion of the transaction is subject to regulatory approvals and other customary conditions. Under the terms of the agreement, HEXPOL will pay a cash purchase price of 212,5 MUSD for Excel Polymers on a cash and debt free basis.
The transaction is expected to be earnings accretive from closing and is expected to generate significant synergies, mainly on the cost side. Synergies, on a pre-tax basis, are expected to amount to approximately 5 MUSD in 2011 and 7 MUSD in 2012.
Integration, transaction and refinancing costs will be charged in the same quarter as closing. Purchase Price Allocations will be communicated as soon as the opening balance sheet is established.
Transaction financing
Commitments have been secured to finance the acquisition of Excel Polymers. As soon as practically possible following completion of the acquisition of Excel Polymers, HEXPOL will pursue a rights issue corresponding to approximately 550 MSEK.
Melker Schörling AB, HEXPOL’s largest shareholder, representing 48,0 per cent of the votes and 27,2 per cent of the capital in HEXPOL, has undertaken to vote in favour of the rights issue at an extraordinary shareholders meeting and subscribe for its pro rata share of the offering.
Melker Schörling AB has also undertaken to subscribe for approximately an additional 22,9 per cent in excess of its pro rata share of the offering. Consequently, subscription commitments for more than 50 per cent of the intended rights issue have been received.