- The acquisition cost is $226 million, funded by cash and credit.
- Completion is expected in summer 2016 after regulatory approvals.
- Hexion PAC generated $370 million in sales and $30 million EBITDA in 2015.
- Synthomer expects $12 million in annual synergies by 2018 with $21 million in costs.
Acquisition Details
Synthomer plc has announced the acquisition of HEXION Performance Adhesives & Coatings (HEXION PAC) for $226 million. The acquisition is funded through existing cash resources and additional credit facilities. The transaction is expected to complete in summer 2016, pending regulatory approvals and other conditions.
Business Overview
HEXION PAC develops, manufactures, and markets dispersions, additives, powder coatings, and specialty monomers. The business serves a global customer base across various end-use sectors, including coatings, adhesives, and construction applications. HEXION PAC employs approximately 750 people and operates seven sites in Europe, the USA, and Asia. In 2015, the business generated $370 million in sales and $30 million in EBITDA, with gross assets of $149 million.
Assets and Operations
The acquisition includes manufacturing sites in the Czech Republic, Italy, Germany, Spain, South Carolina, and Thailand. HEXION PAC produces resins, polymers, monomers, and additives for adhesives, sealants, paints, coatings, mortars, and cements. The business is part of HEXION Inc.'s Epoxy, Phenolic, and Coating Resins Division. The transaction is subject to customary closing conditions, including Works Council consultation, and is expected to close in Q2 2016.
Strategic Impact
This acquisition strengthens Synthomer’s position in the performance adhesives and coatings market, providing access to new technologies, customers, and markets. It complements Synthomer’s existing business geographically and market-wise. The Group anticipates achieving $12 million in annualized synergies by the end of 2018, with estimated costs of $9 million in restructuring and $12 million in capital expenses. The purchase price represents a pre-synergy multiple of 7.5x and a post-synergy multiple of 5.4x, with pro-forma leverage increasing to approximately 1.5x based on 2015 year-end numbers.
