OM Group Inc., a specialty chemicals maker criticized by an activist shareholder for being overcapitalized, agreed to be acquired by Apollo Global Management LLC for about $1.03 billion.
The $34-a-share offer is 28 percent more than OM’s May 29 closing share price, the Cleveland-based company said Monday in a statement. Following completion of the deal, which is expected by year-end, Platform Specialty Products Corp. will buy two OM units in separate deals for a total of $365 million in cash.
OM, which supplies materials used to produce batteries and circuit boards, was targeted by hedge fund FrontFour Capital Group, which said in January that OM’s mergers and acquisitions strategy had “destroyed significant value.”
“Last year, we launched a comprehensive review of strategic alternatives, resulting in our board of directors unanimously concluding that this acquisition of the company is the best course of action to maximize value for OM Group stockholders,” Chairman and Chief Executive Officer Joseph M. Scaminace said in the statement.
Apollo is paying about 9.5 times OM’s estimated earnings before interest, taxes, depreciation and amortization for the next 12 months, according to data compiled by Bloomberg. The median multiple in three comparable deals announced in the past seven years is 6.1.
OM rose 28 percent to $34.04 at the close in New York.
The Apollo deal is the largest in the U.S. specialty chemicals industry since Platform agreed to acquire MacDermid Inc. for $1.8 billion in 2013.
Platform, founded by billionaire Nicolas Berggruen and Martin E. Franklin and backed by billionaire Bill Ackman, has completed four chemicals acquisitions in less than four years. The OM segments that the U.S. company plans to acquire make electronic-chemicals for the manufacturing of printed circuit boards and photovoltaic cells, and photomasks, the master images used in the production of microelectronic devices.
BNP Paribas SA was OM’s financial adviser, Jones Day was legal counsel and Deutsche Bank AG advised the company’s board. Lazard Ltd. and Credit Suisse Group AG were financial advisers to Apollo while Paul, Weiss, Rifkind, Wharton & Garrison LLP was its legal adviser. Credit Suisse is providing debt financing to Apollo.