By: ICN Bureau
Last updated : March 06, 2018 8:18 pm
Ashland Inc. and International Specialty Products Inc. (ISP) today announced that Ashland has agreed to acquire privately owned ISP, a global specialty chemical manufacturer of innovative functional ingredients and technologies. Under the terms of th
Ashland Inc. and International Specialty Products
Inc. (ISP) today announced that Ashland has agreed to acquire privately owned
ISP, a global specialty chemical manufacturer of innovative functional
ingredients and technologies. Under the terms of the stock purchase agreement,
Ashland will pay approximately $3.2 billion for the business in an all-cash
transaction. At closing, ISP's advanced product portfolio will expand Ashland's
position in high-growth markets such as personal care, pharmaceutical and
energy. For the 12 months ended March 31, 2011, ISP generated sales of
approximately $1.6 billion and earnings before interest, taxes, depreciation and
amortization (EBITDA) of approximately $360 million. The transaction is expected
to be immediately accretive to Ashland's earnings per share.
ISP is a leading global supplier of specialty chemicals and performance
enhancing products for consumer and industrial markets. Through its unique
offerings, ISP will bring high-value water soluble polymers and other advanced
technologies into Ashland's functional ingredients business, as well as
complementary additives for Ashland's food and beverage, energy, coatings,
adhesives and water treatment markets. The acquisition is expected to
significantly strengthen Ashland's functional ingredients active patent
portfolio and its team of research and development scientists. The result will
be a stronger, global functional ingredients business with proven technological
and application capabilities to solve customers' unique formulation challenges.
Ashland Chairman and Chief Executive Officer James J. O'Brien said, "This
defining transaction enables us to significantly expand our market positions in
higher margin, higher growth and less cyclical global markets like personal care
and pharmaceuticals. It broadens Ashland's presence within attractive growth
areas like skin, hair and oral care, which are large and fast-growing segments
of the $5-billion-plus personal care specialty ingredients market. In addition,
we expect to more than double the size of our highest-margin functional
ingredients business."
ISP President and Chief Executive Officer Sunil Kumar said, "We are very
enthusiastic about the opportunity to combine ISP with Ashland. Both companies
have a strong commitment to serving customers with innovative solutions and
technologies. We appreciate Ashland's passion for this business and we believe
this combination offers tremendous potential for our customers, key business
partners and employees."
O'Brien added, "We look forward to welcoming ISP's employees to Ashland. Our
business models are complementary and we share common capabilities in
formulation, application development and polymerization. We are disciplined in
the underlying processes and operations that enable us to manufacture
best-in-class products. Given the quality of leadership within both businesses
and our success with the integration of prior acquisitions, we are confident we
will achieve a smooth transition to a combined company. We are excited about the
opportunities for innovation and growth that lie ahead of us."
Transaction Details
On a pro forma basis giving effect to the transaction, Ashland would have had
combined revenue for the 12 months ended March 31, 2011, of approximately $7.6
billion, with nearly half of revenues generated outside North America. The newly
combined functional ingredients business is expected to contribute roughly half
of Ashland's $1.1-billion pro forma EBITDA.
Ashland expects to realize annualized run-rate cost savings of approximately $50
million by the second year following the transaction's close through eliminating
redundancies and capturing operational efficiencies.
The transaction, which is expected to close prior to the end of the September
quarter, is subject to satisfaction of customary closing conditions and receipt
of U.S. and European Union regulatory approvals. The purchase price will be
subject to post-closing adjustments for changes in net working capital and
certain other items. The transaction will be funded through a combination of
cash on hand and committed financing from Citi, The Bank of Nova Scotia, BofA
Merrill Lynch and U.S. Bank National Association, subject to customary terms and
conditions.
Under the terms of the stock purchase agreement, if the financing is not
available and the other conditions to closing are satisfied, ISP has the right
to terminate the agreement and require Ashland to pay a fee of $413 million.
BofA Merrill Lynch acted as financial advisor, and Cravath, Swaine & Moore LLP
acted as legal counsel, to Ashland. Moelis & Company acted as financial advisor,
and Sullivan and Cromwell LLP acted as legal counsel, to ISP.