Chemtrade Logistics Income Fund (CHE-U), a Canadian sulfuric-acid producer, agreed to buy General Chemical Holding Co. from private-equity firm American Securities LLC for $860 million to expand its North American water-treatment capacity.
Chemtrade will finance the deal with $1 billion of credit facilities and by raising about $300 million in a share sale, the Toronto-based company said in a statement today. Chemtrade rose 7.7 percent to C$18.33 at 9:57 a.m. in Toronto after earlier gaining 10 percent, the most intraday in two years.
General Chemical, which is based in Parsippany, New Jersey, manufactures sulphuric acid and other chemicals for customers including the water-treatment, pharmaceutical and the pulp and paper industries. Chemtrade produces chemicals from five plants in the U.S.
General Chemical’s earnings before interest, taxes, depreciation and amortization were $110 million on sales of $390 million in the year through Sept. 30. That means the deal values General Chemical at 7.8 times Ebitda.
BMO Capital Markets and Jefferies Group LLC are Chemtrade’s financial advisers on the deal while Osler, Hoskin & Harcourt LLP and Covington & Burling LLP are its legal advisers.
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