Huntsman has announced its agreement to acquire CVC Thermoset Specialties, a North American speciality chemical manufacturer serving the industrial composites, adhesives and coatings markets.
CVC Thermoset Specialties is part of Emerald Performance Materials LLC, which is majority owned by affiliates of American Securities LLC.
Commenting on the acquisition, Scott Wright, President of Huntsman's Advanced Materials division, said, “The acquisition of CVC Thermoset Specialties brings valuable complementary technology breadth to our Advanced Materials portfolio and its unique products will make systems using our class-leading epoxy-based materials even tougher, stronger and more durable.
"This business manufactures highly specialised toughening, curing and other additives used in a wide range of composite, adhesive and coatings applications across aerospace, automotive and industrial markets.
"In addition to strengthening our position in North America, Huntsman will use our existing asset footprint and routes to market in Europe and Asia to rapidly grow and globalise CVC Thermoset Specialties’ exciting and complementary product range.
"This acquisition will further improve our ability to create differentiation in our customers’ applications, in particular through our strong formulations business.”
Under terms of the agreement, Huntsman will pay US$300M, subject to customary closing adjustments, in an all-cash transaction funded from available liquidity.
Based on full year 2019, the purchase price represents an adjusted EBITDA multiple of approximately 10 times, or between approximately 7 to 8 times pro forma for synergies, the lower multiple end being dependent upon normal growth market conditions.
The transaction is expected to close around mid-year of 2020.
Peter Huntsman, Chairman, President and CEO, further commented, “This bolt-on fits all the criteria we look for in acquisitions for our Advanced Materials division, including new technology, synergies and globalisation opportunities.
"The business currently achieves EBITDA margins in excess of 25% and we expect to achieve significant synergies within two years.
“In these uncertain times, our financial strength will allow us to keep looking for these types of acquisitions, while at the same time maintain a conservative balance sheet and opportunistically repurchase shares.
"We remain committed to our balanced approach to capital allocation.
"Year-to-date we have taken advantage of our depressed stock price and have repurchased approximately US$85M in stock.
"Lastly, while forward visibility remains low, the first quarter is on track to deliver on the outlook that we communicated on our February 13, 2020 earnings call.”