- Purchase of Hexion unit expected to be completed by mid-year
- Synthomer also sells business to Ferro for 13 million pounds
Synthomer Plc, the world’s biggest maker of nitrile rubber used in medical gloves, agreed to buy an adhesives and coatings business from Hexion Inc. for $226 million to drive expansion in the U.S. and Asia.
The purchase adds seven factories generating annual sales of $370 million and earnings before interest, taxes, depreciation and amortization of $30 million, the Harlow, England-based company said in a statement on Monday. Synthomer is paying a multiple of 7.5 times earnings, excluding estimated annualized cost savings from integrating the business of about $12 million.
The deal is the first since the arrival last year of Chief Executive Officer Calum MacLean, who spent two decades helping to build Ineos into one of the world’s top chemical companies with $54 billion in sales by acquiring the unwanted assets of oil majors such as BP Plc. Synthomer, which is looking to diversify its business away from more cyclical markets, also today announced the sale of a unit to Ferro SA in South Africa for 13 million pounds ($19 million).
“Hexion PAC fits extremely well into the Synthomer portfolio,” Harry Philips, an analyst at Canaccord Genuity in London, said in a note. “This is an attractive price. This leaves plenty of scope for further M&A activity.”
Synthomer was advised by Barclays and Canaccord. Shares of the company added 1.7 percent to 332.50 pence as of 8:13 a.m.