SHLM took out weaker competitor ICOC awhile back. Today Pol is doing the same.
PolyOne Accelerates Specialty Transformation With Agreement to Acquire Spartech
Spartech expands PolyOne's specialty portfolio with adjacent technologies in attractive end markets PolyOne Corporation ( POL), a premier provider of specialized polymer materials, services and solutions, and Spartech ( SEH), a leading producer of plastic sheet, compounds and packaging solutions, today announced they have entered into a definitive agreement, under which PolyOne will acquire Spartech. Under the terms of the agreement, Spartech stockholders will receive $2.67 in cash and 0.3167 shares of PolyOne common stock for each share of Spartech common stock. Based on the closing price of PolyOne shares on Tuesday, October 23, Spartech stockholders will receive cash and stock valued at $8.00 per Spartech common share, representing a total transaction value of approximately $393 million, including the assumption of Spartech's net debt of $142 million.
"I am extremely pleased to announce we've reached an agreement to acquire Spartech," said Stephen D. Newlin, chairman, president and chief executive officer, PolyOne Corporation. "Spartech expands PolyOne's specialty portfolio with adjacent technologies in attractive end markets where we already participate as well as new ones like aerospace and security. By combining Spartech's leading market positions in sheet, rigid barrier packaging and specialty cast acrylics with PolyOne's capabilities, we can accelerate growth for both companies. We believe this is a very compelling transaction for our shareholders, customers and employees.
"We believe that Spartech's businesses have specialty characteristics that are reminiscent of PolyOne's Specialty platform in the early stages of our transformation. Our exceptional management team has the experience and proven track record of transforming businesses with specialty potential through execution of our existing four pillar strategy," added Mr. Newlin.
"We are excited to be joining forces with PolyOne as we believe this transaction represents the best path forward for our stockholders, customers and valued employees," said Vicki Holt, president and chief executive officer, Spartech Corporation. "PolyOne and Spartech have complementary growth strategies, and by combining our resources we expect to accelerate our shift to specialty applications with a more competitive cost structure, enhanced customer relationships, improved market access and increasingly innovative technologies. Furthermore, this transaction provides Spartech's stockholders with immediate value through a combination of a meaningful upfront premium, participation in the continued upside of our combined businesses, and in the synergies inherent in this transaction. I want to thank our employees for their tireless commitment to our customers, and the execution of our strategies to grow earnings. We look forward to working closely with PolyOne to close this transaction as expeditiously as possible."
Spartech is a leading producer of plastic products including polymeric compounds, concentrates, custom extruded sheet and rollstock products and packaging technologies for a wide spectrum of customers. Spartech's three business segments operate 30 facilities in the United States, Mexico, Canada and France. Spartech achieved sales and adjusted EBITDA of approximately $1.2 billion and $53.1 million, respectively, for the trailing twelve months ended August 4, 2012.
"We believe this acquisition offers significant operational and commercial synergy opportunities beyond just the elimination of duplicate public company costs. We see opportunities to align operations and supply chain with the voice of the customer, shift mix away from volume and toward value, expand cross-selling capabilities and globalize Spartech's business platforms," said Mr. Newlin. "In particular, we are very excited to leverage Spartech's capabilities in applications where Spartech has complementary offerings."
On a preliminary basis, PolyOne has identified annual synergies of approximately $65 million to be phased in by the third year following acquisition. Excluding acquisition-related costs and charges, PolyOne expects the transaction to be accretive to earnings in the first full year and ultimately add $0.50 to EPS, as the $65 million of synergies are achieved.
Mr. Newlin added, "We look forward to completing the transaction and joining our companies together in order to deliver even stronger returns to PolyOne shareholders."
In aggregate, PolyOne will issue approximately 10 million shares of PolyOne stock and pay approximately $84 million in cash to Spartech shareholders. PolyOne intends to finance the cash portion of the purchase price through a combination of cash on hand and new long-term debt financing.
In connection with the transaction, PolyOne's Board of Directors increased the company's share repurchase authorization to a total of 20 million shares contingent upon consummation of the Spartech acquisition. Subject to market and other conditions, and in addition to previously planned purchases to offset dilution, PolyOne intends to opportunistically buy back shares issued in connection with this transaction, and complete these repurchases within 12 to 18 months following the close of the acquisition. Assuming this share repurchase is fully executed, this will essentially result in a total financial impact to the company as if the acquisition of Spartech were structured with 100% cash. PolyOne's management and Board of Directors remain committed to maintaining a strong credit profile and providing returns to shareholders in the form of cash dividends.
For Spartech investors, the proposed transaction represents a premium of 56 percent to the value of its stock on October 23, 2012, the last trading day prior to the announcement of the transaction.
The transaction, which was unanimously approved by the Boards of Directors of both companies, remains subject to approval by Spartech's shareholders and receipt of required regulatory approvals as well as other customary closing conditions. The transaction is expected to close in the first quarter of 2013.
Bank of America Merrill Lynch, Moelis & Company and KeyBanc Capital Markets acted as financial advisors to PolyOne on this transaction, and Jones Day is acting as legal counsel. Spartech's financial and legal advisors for this transaction are Barclays and K&L Gates, respectively.
PolyOne will host a conference call in which both third quarter earnings and the Spartech acquisition will be discussed on October 24, 2012 at 9:00 a.m. EST. The call can be accessed by dialing 866-356-3377 (International:617-597-5392) and entering Passcode 27155297. To listen to the live webcast of the conference call and view the accompanying slides, go to www.polyone.com/investor.
Spartech will host a conference call with investors and financial analysts in which the transaction will be discussed on October 24, 2012 at 10:30 a.m. EST. Investors can listen to the call live via webcast by logging onto www.spartech.com, or via phone by dialing (877) 724-7545 and providing the Conference ID#: 57101460. International callers may dial (832) 900-4628.
About Spartech
With annual revenues of approximately $1.2 billion, Spartech is a leading producer of plastic products including polymeric compounds, concentrates, custom extruded sheet and rollstock products and packaging solutions for a wide spectrum of customers. Spartech's three business segments, which operate in the United States, Mexico, Canada, and France, annually process approximately one billion pounds of plastic resins, specialty plastic alloys, and color and specialty compounds. Additional information can be found at www.spartech.com.
About PolyOne
PolyOne Corporation, with 2011 revenues of $2.9 billion, is a premier provider of specialized polymer materials, services and solutions. The company is dedicated to serving customers in diverse industries around the globe, by creating value through collaboration, innovation and an unwavering commitment to excellence. Guided by its Core Values, Sustainability Promise and No Surprises PledgeSM, PolyOne is committed to its customers, employees, communities and stockholders through ethical, sustainable and fiscally responsible principles. For more information, visit www.polyone.com.
finance.yahoo.comLeading North America market positions in sheet, rigid barrier packaging and specialty cast acrylic technologiesFocused areas of growth in aerospace, security, packaging and healthcareSignificant opportunity to expand profitability by leveraging PolyOne's four-pillar strategy Bolt-on acquisition with opportunity for global expansionAlign capacity and cost structure with the voice of the customerMix shift away from volume toward valueCross selling to enhance market penetrationPreliminary annualized synergies estimated at $65 million Expected to be accretive to EPS in first full year post-acquisitionAnnual EPS expected to expand by $0.50 per share upon full synergy capturePolyOne has a proven management team with a track record of success Spartech looks much like PolyOne did in the early years of transformationSubstantial share price appreciation potential for all shareholdersSpartech stockholders to receive cash and stock valued at $8.00 per Spartech common share
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