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Platform Specialty Products Corporation (PAH) and Alent plc announced today the terms of a recommended offer by Platform to acquire all of the issued and outstanding shares of Alent in a cash and stock transaction for approximately $2.1 billion. Including net debt, the total transaction value is approximately $2.3 billion.
Under the terms of the transaction, for each Alent share, Alent shareholders will receive 503 pence in cash. The transaction values Alent's entire issued and to be issued share capital at $2,096 million ([Pounds]1,351 million). This represents a premium of approximately 49% over Alent's closing price of 337.7 pence per share as of July 10, 2015, approximately 37% over the three month volume weighted average share price of 368.2 pence, and approximately 24% over the 52-week high share price of 406.2 pence on March 12, 2015. The transaction will also include a partial share alternative under which eligible Alent shareholders can elect to receive Platform common stock in lieu of part or all of the cash consideration to which they would otherwise be entitled under the transaction (subject to pro rating in accordance with the terms of such partial share alternative).
Alent is a global supplier of specialty chemicals and engineered materials used primarily in electronics, automotive and industrial applications. Alent supplies high performance consumable products and services which create value by enabling superior end-product performance in the areas of functionality, reliability and longevity. Alent adds value to its customers' businesses by providing products and services which allow them to increase the efficiency and quality of their operations and products. Alent's business comprises two business segments: Enthone, its Surface Chemistries business - a global supplier of electroplating chemistry to the electronics, automotive and industrial industries; and Alpha, its Assembly Materials business - a global supplier of interconnect materials, primarily into electronics applications.
Alent is a highly attractive business with compelling growth prospects and a proven financial track record. Platform believes the transaction will allow it to combine complementary product portfolios and geographical footprints. Additionally, it will improve the geographic range and product capabilities in surface treatment, expand Platform's product offering and provide an opportunity to unlock substantial value through the realization of material costs synergies and sales growth opportunities. Platform believes that the combined group will be able to achieve annual pre-tax cost synergies of $50 million which are expected to be phased in over the three years after the transaction is completed.
Martin E. Franklin, Platform's Founder and Chairman, said, "The proposed acquisition of Alent marks a further step in the Platform strategy of building a portfolio of best-in-class 'Asset-Lite, High-Touch' businesses in the specialty chemicals industry. This business and acquisition fits well within our stated objectives, and we are compelled by the value creation the combination may generate. The creation of Platform was the catalyst that created an environment where the Alent transaction could take place. That's what Platform is all about. Alent is a terrific fit and rebalances the portfolio as we continue to build the company."
Daniel H. Leever, Platform's Chief Executive Officer, said, "Alent is a strong complement to Platform's founding asset MacDermid, and I am excited to see it become a part of the Platform family. We have a long history with Alent and its predecessor company, and these are assets we know well. We believe the synergy potential is significant as is our combined ability to deliver better technology and service to our customers. Alent will far enhance the breadth, depth and overall footprint of Platform's Performance Applications segment. Alent's Enthone division represents a perfect partner as we continue to grow and build MacDermid whilst Alent's Alpha division adds several new high return positions to our portfolio. This latest acquisition further underlines the Platform 'Asset-Lite, High-Touch' thesis and the strength of our long-term growth story."
Commenting on today's announcement, Andrew Heath, Chief Executive of Alent, said:
"Since the successful demerger of Alent at the end of 2012, our market leading businesses have outperformed their end-markets and delivered increasing returns. Major steps have been taken to improve efficiency together with investments in facilities and R&D to support future growth. In addition, our Investment for Growth strategy announced earlier this year positions Alent to deliver long-term growth and sustainable margin improvement. The significant premium being offered by Platform recognizes the progress Alent has made, the opportunities in front of us and the overall quality of the business, whilst also presenting a clear opportunity for our shareholders to realize the full value of their investment earlier.
"I said when I joined Alent that it is a strong business, at the heart of which is a tremendous technical capability that has been built up by the knowledge, passion and enthusiasm of our people around the world. The combination with Platform, drawing on the best of both that Alent and Platform have to offer, is a compelling proposition which I believe will be better able to serve customers and provide even greater opportunities for our employees. Our Board is unanimous in its recommendation of the proposed Transaction."
Alent will not pay an interim dividend for the six months ended June 30, 2015. Platform has agreed that the Alent Directors will be entitled to recommend to Alent shareholders (if they see fit), and the Alent shareholders will be entitled to resolve and be paid by Alent, a final dividend in respect of the full-year ending December 31, 2015 without any reduction in the transaction price payable by Platform, provided that:
- the amount of such dividend is not more than 6.45 pence per Alent share;
- the relevant annual general meeting shall not be held prior to May 1, 2016;
- the payment date for such dividend shall be set no earlier than June 1, 2016; and
- the resolution at the relevant annual meeting in respect of such dividend shall provide that the dividend shall be payable on the relevant payment date only if the transaction has not completed by that date, such permissible dividend being the "2015 Final Dividend".
If any dividend or other distribution is authorized, declared, made or paid in respect of the Alent shares prior to the date on which the transaction completes, other than the 2015 Final Dividend, or in excess of the 2015 Final Dividend, Platform reserves the right to reduce the transaction price by the amount of all or part of any such excess in the case of the 2015 Final Dividend, or otherwise by the amount of all or part of any such dividend or other distribution.
The transaction will be implemented by way of a court-sanctioned scheme of arrangement under the U.K. Companies Act 2006. Both companies' boards of directors unanimously support the transaction, which is expected to close in late 2015 or early 2016 after the satisfaction of the applicable closing conditions, including Alent shareholder approval and regulatory approvals in certain jurisdictions. Following closing of the transaction, Platform will remain a New York Stock Exchange listed company domiciled in the United States.
Credit Suisse is acting as financial adviser and is providing committed financing to Platform, with Slaughter and May acting as lead U.K. legal adviser and Paul, Weiss, Rifkind, Wharton & Garrison LLP acting as U.S. legal adviser.
Alent is a leading global supplier of advanced surface treatment plating chemicals and electronics assembly materials. Its principal end-market is global electronics production which accounts for approximately three-quarters of net sales value with the automotive and industrial end-markets comprising the balance.
Platform is a global, diversified producer of high-technology specialty chemicals and provider of technical services. The business involves the formulation of a broad range of solutions-oriented specialty chemicals, which are sold into multiple industries, including agrochemical, animal health, electronics, graphic arts, plating, and offshore oil production and drilling. More information on Platform is available here.