US KMG to acquire OM Group’s Ultra Pure Chemicals business

29 April 2013 15:38  [Source: ICIS news]

LONDON (ICIS)--US-based specialty chemicals producer KMG Chemicals has entered into an agreement to acquire the Ultra Pure Chemicals (UPC) subsidiaries of OM Group located in the US, England and Singapore, it said on Monday.

KMG has simultaneously offered to purchase US-headquartered OM Group’s UPC subsidiary located in France, it added.

The cost of the combined acquisition, expected to be closed by the end of June 2013, would total $60m (€46m) in cash, including working capital, KMG said.

OM Group’s UPC business generated $93.8m in sales in calendar year 2012. Its subsidiaries include four facilities in Europe (Riddings in the UK; St Cheron, St Fromond and Rousset in France); two facilities in Singapore; and one facility in Fremont, California, in the US, KMG added.

Neal Butler, president and CEO of KMG, said: “This acquisition substantially advances KMG’s strategy in the global high purity process chemicals market and also provides KMG with a strategically located presence in the fast-growing Asian market.

“When this transaction is completed, KMG will be positioned as a leading global supplier of high purity process chemicals, providing the world’s major semiconductor manufacturers with a comprehensive portfolio of products that can meet stringent requirements for purity and reliability,” he added.

Butler said: “We will see some dilution to earnings in our fiscal fourth quarter due to transaction, closing and integration costs. Integration costs are expected to continue in fiscal 2014, but we anticipate the transaction will be accretive to full-year fiscal 2014 results.

“We saw a substantial contribution from the integration of the US operations of our first two Electronic Chemicals acquisitions, and we are confident that this, our third Electronic Chemicals acquisition, will contribute significantly to earnings and cash flow in the future as we complete the integration of our combined operations,” he added.

"The divestiture of UPC represents another step to optimise our portfolio and sharpen our strategic focus," said Joe Scaminace, chairman and CEO of OM Group, in a separated press release.

As part of the deal, KMG entered into an amendment to its credit facility which increases the company’s borrowing capacity from $60m to $110m, it added.

($1 = €0.77)

By: Franco Capaldo
+44 (0)20 8652 3214

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