Move values SummitReheis at 11.8x underlying EBITDA for 2016
Companies: Elementis plc
UK-based chemicals specialist Elementis has announced a $360m deal for US-based SummitReheis in a move that significantly enhances its personal care business.
For the year ended 31 December, SummitReheis is expected to post revenue of $134m and underlying EBITDA of c.$28m, meaning the acquisition values the business at approx 11.8x underlying EBITDA.
SummitReheis
SummitReheis is a speciality chemicals platform that produces a range of critical active ingredients and materials for use in personal care, pharmaceutical and dental products. Its clients include Procter and Gamble and Colgate.
Its antiperspirant business, which accounts for more than 60% of sales, is the market leader in the manufacture and sale of active ingredients for antiperspirants, with long-standing relationships across the Americas, Europe and Asia.
Today's acquisition means Elementis' personal care business has annual sales of c.$200m and a significantly increased presence in the market.
The Company believes it will enhance growth as it combines complementary products and customers, and expands its geographic presence, all offering cross-selling opportunities.
Funding
The acquisition will be funded with new $475m debt facilities and cash reserves. It is expected to deliver "material" earnings accretion and substantial free cash flow growth in the current financial year.
Speaking about the acquisition, CEO Paul Waterman said that combining the existing business with SummitReheis was transformative for its personal care business, creating a "substantial, high return platform" that will accelerate the firm's growth strategy:
“At our recent Capital Markets Day presentation, we highlighted the growth prospects in personal care as a key opportunity for Elementis, driven by long term positive demographic trends and an increasingly sophisticated consumer. Our leading position with proprietary hectorite and Rheoluxe® rheology modifiers will be augmented by SummitReheis’ complementary position in specialty additives for anti-perspirants, pharmaceuticals and dental products.
The Group is well positioned to capitalise on this acquisition through the enhanced geographic footprint and strong customer relationships that it brings."
Shares in Elementis rose 8% in early trading on Friday.
