A merger has been announced by two major players in the chemical industry. Solenis and Diversey are set to merge, with the deal expected to be completed by 2023. The transaction is estimated to be worth $4.6 billion. Experts at AURIS Finance, a consultancy specialising in mergers and acquisitions, take a closer look at this major market move.
Eric Foss, Chairman of the Board of Directors of Solenis, described the transaction as “a merger of two leading companies that complement each other perfectly”. It has to be said that Solenis and Diversey are currently among the leaders in the hygiene and chemical manufacturing markets.
Two leading chemical companies join forces
Diversey is headquartered in South Carolina. With 8,600 employees in 80 countries, Diversey is a leading chemical company in a wide range of sectors, including water treatment, industrial and petrochemical. The company provides hygiene, infection prevention and cleaning solutions and has a turnover of $2.6 billion. A giant about to be acquired by another giant. Solenis, with a turnover of $3.5 billion, has been owned by the Platinium Equity group since 2017. It is a leading producer of specialty chemicals, with its core business focused on providing sustainable solutions for water-intensive industries such as pulp, packaging board, tissue and towel manufacturers. The company is also based in the United States. It has 6,500 employees in 130 countries on six continents.
Diversey to exit the stock market
The acquisition is expected to close in the second half of 2023 at an estimated cost of $4.6 billion, which is in line with Diversey’s current valuation. The transaction will be payable in cash, meaning that all shareholders other than Bain Capital will receive $8.40 per share, representing a 41% premium to the share price on the last trading day, 7 March 2023. After that date, Diversey will revert to being a private company. It will remain partially owned by Bain Capital, which will transfer some of its Diversey shares to a Solensis subsidiary in exchange for shares.
Two funds at the helm
Bain Capital previously held a 73% majority stake in Diversey. Solenis is owned by Platinum Equity, an investment fund specialising in industrial assets with a portfolio of around 50 companies. It acquired Solenis in 2021 for $5.25 billion. The new company will therefore be owned by two private equity funds. The merger will create synergies and cost savings to capture a fast-growing market driven by the accelerating energy transition. “In combining these two complementary businesses, we expect to usher in an exciting new chapter in our long history of helping customers tackle core challenges such as water and energy management, partnering on sustainability issues to work towards a cleaner and safer world, and reducing environmental impact. With continued support from Platinum Equity and now Bain Capital, we are confident that we will maximise the opportunities ahead,” said John Panichella, CEO of Solenis, announcing the merger. He will now lead the combined company.
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