Platform Acquisition Holdings is to acquire MacDermid, a provider of high value-added specialty chemicals, for approximately USD1.8bn plus contingent consideration.
Platform will be renamed Platform Specialty Products Corporation (PSP). Following the close of the transaction, PSP expects to complete a listing of its shares on the New York Stock Exchange by the end of 2013.
Platform's shares and warrants have been suspended from trading on the London Stock Exchange and it is not expected that trading will resume. It is anticipated that Platform's listing of shares and warrants on the London Stock Exchange will be cancelled on or shortly after the New York Stock Exchange listing is achieved.
MacDermid is a global specialty chemicals company that has offered its customers chemistry solutions and technical services for more than 90 years. The company serves over 3,500 customers in 24 countries across the electronics, graphic arts, metals, oil production and drilling and plastics finishing industries.
MacDermid has delivered an estimated USD742m in sales and USD180m in adjusted EBITDA for the 12 months ended 30 September 2013. In addition, the company maintains a robust margin profile, including an estimated gross margin of 51.0 per cent and an estimated adjusted EBITDA margin of 24.3 per cent over the same period. MacDermid generated USD148m in free cash flow in 2012, with a cash conversion ratio of 91.1 per cent. The business historically requires minimal capital expenditures, typically less than two per cent of revenue.
MacDermid will continue to be operated as a standalone business by its existing management team under the PSP umbrella. At closing, Platform intends to change the composition of its board in anticipation of its move from the London Stock Exchange to the New York Stock Exchange.
Martin E. Franklin, founder and executive chairman of Jarden Corporation, will serve as PSP's chairman, to provide ongoing strategic guidance over the long term. MacDermid's existing executive team will become PSP's new executive team. MacDermid's chairman and chief executive officer Daniel Leever will become PSP's CEO and vice chairman. Frank Monteiro, MacDermid's chief financial officer, will become the CFO of PSP.
Franklin says: "As we look to build a portfolio of market-leading specialty chemicals businesses, MacDermid is a natural choice to serve as the initial investment and foundation for Platform Specialty Products. MacDermid's heritage and market presence make it a leader within the sector, and this transaction will provide the Company with the tools and resources necessary to reach the next level of success. We will maintain and respect the integrity of the seasoned and skilled management team as well as the MacDermid brand, products and operations, which have achieved consistent and impressive growth. We look forward to this being a successful, long-term partnership and are confident that this transaction will be the first of many milestones we will achieve together."
"Platform was extremely disciplined in reviewing potential opportunities," says Lord Myners, the independent chairman of Platform's board of directors. “The MacDermid transaction offers a compelling financial profile and strategic fit that is solidly in line with our acquisition criteria. The Board voted unanimously in favour of entering into the business combination agreement. We look forward to closing the transaction shortly and recommencing trading once the requirements of the US Securities and Exchange Commission and The New York Stock Exchange are satisfied."
The transaction is expected to be funded through proceeds from Platform's previously completed IPO, an amendment of MacDermid's existing first lien term debt and proceeds from a warrant exchange offer to be carried out by Platform. After giving effect to the transaction, the company net debt to EBITDA leverage ratio is expected to be less than 4X. The transaction is expected to close by the end of October 2013, subject to customary closing conditions.
Barclays acted as financial advisor and Greenberg Traurig acted as legal advisor to Platform on the transaction. Lazard acted as financial advisor to the seller.
