LyondellBasell to acquire A. Schulman for $2.25bn

Author: Jonathan Lopez


Plastic injection moulding

LONDON (ICIS)--LyondellBasell is to acquire plastics compounds producer A. Schulman for $2.25bn, the US chemical major said on Thursday.

The deal is expected to close in the second half of 2018 and is subject to regulatory approvals.

LyondellBasell will purchase all of A. Schulman’s common stock for $42/share in cash, with one contingent value right per share.

The acquirer plans to pay a premium over the closing price on A. Schulman on Wednesday, at $38.65, on a day in which the shares rose by more than 4%.

Moreover, A. Schulman's shares shot up as soon as the announcement was made public and rose more than 8% in after-hours trading, to $42.10, matching the price offered by LyondellBasell.

The buyer will also assume outstanding debt and certain other obligations, it said.

“In addition, the contingent value rights generally will provide a holder with an opportunity to receive certain net proceeds, if any are recovered, from certain ongoing litigation and government investigations relating to A. Schulman's Citadel and Lucent acquisitions,” said LyondellBAsell.

The US chemical major added that it was aiming to use cash-on-hand to finance the acquisition, and said that it was aiming to achieve savings of around $150m in run-rate cost synergies within two years.

It added the deal would be accretive to earnings within the first full year following the acquisition’s close.

LyondellBasell plans to integrate the acquired company into its compounding business.

According to figures by the company, compound revenue figures for the resulting entity post-acquisition would have stood at $4.6bn over the last 12 months.

Earnings before interest, taxes, depreciation and amortisation (EBITDA), in combined terms, would have stood at $446m.

"[The acquisition gives LyondellBasell] The ability to serve high-growth end markets beyond the automotive sector, such as packaging and consumer products, electronics and appliances, building and construction, and agriculture," said Bob Patel, CEO at LyondellBasell.

"This transaction, which provides our shareholders with a compelling, immediate cash premium, represents the culmination of a robust assessment of strategic alternatives undertaken by our board of directors," said Joseph M. Gingo, CEO at A. Schulman.

Pictured: Plastic injection moulding, used to make components from thermoplastics, one of A. Schulman’s products
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