Transaction expected to
strengthen Ashland's position in fast-growing nutraceutical end
market while advancing the company's processing know-how and
formulation expertise
COVINGTON, KY, April 17, 2017 -
Ashland Global Holdings Inc. (NYSE: ASH) today announced that its
subsidiary has signed a definitive agreement to acquire privately
owned Pharmachem Laboratories, Inc., a leading provider of quality
ingredients to the global health and wellness industries and
high-value differentiated products to fragrance and flavor houses.
Under terms of the stock purchase agreement, Ashland will pay $660
million in an all-cash transaction that is expected to be completed
before the end of the June quarter. The acquisition, which is
subject to customary closing conditions and required regulatory
approvals, will be funded with bank financing and available cash.
The acquisition is expected to be accretive to Ashland's earnings
per share in the first year following the close of the
transaction.
With annual revenues of
approximately $300 million and 14 manufacturing facilities in the
United States and Mexico, New Jersey-based Pharmachem develops,
manufactures and supplies custom and branded nutritional and
fragrance products. The 38-year-old company, whose customers are
some of the best-known consumer brands in the world, sells to the
following end markets:
-
Nutrition and health (43 percent of
total sales) - Key supplier to $39 billion vitamin and dietary
supplement market;
-
Fragrance and flavors (33 percent) -
Primary application as an ingredient for fragrances in consumer
products such as laundry detergents and fine perfumes;
-
Food, beverage and personal care (15
percent) - Ingredients used in products sold through specialty
retailers, multi-level marketers, and topical skin care and
cosmetics; and
-
Custom manufacturing (9 percent) -
Services include refining, granulation and spray drying. Also
operates one of the largest custom extraction facilities for
natural ingredients in North America.
"The acquisition of Pharmachem
offers a number of exciting growth opportunities in higher-margin
end markets while also strengthening our specialty product line,"
said William A. Wulfsohn, Ashland chairman and chief executive
officer. "This combination will enhance our position in
fast-growing nutraceutical end markets, open a new opportunity
within fragrances and flavors, and strengthen Ashland's food
ingredient business by adding customized functional solutions."
He continued: "We were also
extremely impressed by Pharmachem's world-class operations, leading
market positions, dedicated employees and talented leadership team.
In combining Pharmachem and Ashland, we can leverage our extensive
sales channels, technical service network and global applications
labs to accelerate Pharmachem's growth. We look forward to
discussing the Pharmachem transaction in more detail during our
second-quarter earnings webcast next week and Ashland's Investor
Day in New York City on May 1."
"This is a great strategic fit for
Pharmachem as we look to build on our well-established track record
of growth and financial performance," said Colin MacIntyre,
Pharmachem chief executive officer. "We have the opportunity to
create something unique in our industry by combining Pharmachem's
custom manufacturing capabilities with Ashland's formulation
knowledge and excipients expertise. Together we can drive the next
phase of Pharmachem's growth while contributing to Ashland's vision
of creating the world's premier specialty chemicals company."
The all-cash purchase price of
$660 million represents a transaction multiple of ~10.5x
Pharmachem's estimated fiscal 2017 adjusted EBITDA, or ~7.5x after
adjusting for expected cost synergies and tax optimization. Ashland
anticipates achieving meaningful cost synergies from leveraging
combined capabilities, as well as tax synergies driven by the
integration of Pharmachem into Ashland's global business
structure.
Slide presentation materials
discussing the transaction will be posted to the Investor Relations
section of Ashland's website at http://investor.ashland.com.
BofA Merrill Lynch is acting as
financial advisor to Ashland on the transaction and Cravath, Swaine
& Moore LLP is acting as legal advisor.
Moelis & Company LLC is acting
as financial advisor to Pharmachem on the transaction and Arnold
& Porter Kaye Scholer LLP is acting as legal advisor.
About Ashland
Ashland Global Holdings Inc. (NYSE: ASH) is a premier global
specialty chemicals company serving customers in a wide range of
consumer and industrial markets, including adhesives, architectural
coatings, automotive, construction, energy, food and beverage,
personal care and pharmaceutical. At Ashland, we are 6,000
passionate, tenacious solvers - from renowned scientists and
research chemists to talented engineers and plant operators - who
thrive on developing practical, innovative and elegant solutions to
complex problems for customers in more than 100 countries. Ashland
also maintains a controlling interest in Valvoline Inc. (NYSE:
VVV), a premium consumer-branded lubricant supplier.
Visit ashland.com to learn more.
C-ASH
Forward-Looking
Statements
This news release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Ashland has identified
some of these forward-looking statements with words such as
"anticipates," "believes," "expects," "estimates," "is likely,"
"predicts," "projects," "forecasts," "objectives," "may," "will,"
"should," "plans" and "intends" and the negative of these words or
other comparable terminology. These forward-looking statements
include statements relating to our expectation that the proposed
acquisition of Pharmachem Laboratories, Inc. (Pharmachem) will be
completed before the end of the June quarter and that the proposed
acquisition will be accretive to earnings per share. In addition,
Ashland may from time to time make forward-looking statements in
its annual reports, quarterly reports and other filings with the
SEC, news releases and other written and oral communications. These
forward-looking statements are based on Ashland's expectations and
assumptions, as of the date such statements are made, regarding
Ashland's future operating performance and financial condition, the
expected completion of the final separation of Valvoline Inc., the
strategic and competitive advantages of each company, and future
opportunities for each company, as well as the economy and other
future events or circumstances. Ashland's expectations and
assumptions include, without limitation, internal forecasts and
analyses of current and future market conditions and trends,
management plans and strategies, operating efficiencies and
economic conditions (such as prices, supply and demand, cost of raw
materials, and the ability to recover raw-material cost increases
through price increases), and risks and uncertainties associated
with the following: Ashland's substantial indebtedness (including
the possibility that such indebtedness and related restrictive
covenants may adversely affect Ashland's future cash flows, results
of operations, financial condition and its ability to repay debt);
the impact of acquisitions and/or divestitures Ashland has made or
may make, including the proposed acquisition of Pharmachem
(including the possibility that Ashland may not complete the
proposed acquisition of Pharmachem or Ashland may not realize the
anticipated benefits from such transactions); and severe weather,
natural disasters, and legal proceedings and claims (including
environmental and asbestos matters). Various risks and
uncertainties may cause actual results to differ materially from
those stated, projected or implied by any forward-looking
statements, including, without limitation, risks and uncertainties
affecting Ashland that are described in Ashland's most recent Form
10-K (including Item 1A Risk Factors) filed with the SEC, which is
available on Ashland's website at http://investor.ashland.com or on
the SEC's website at http://www.sec.gov. Ashland believes its
expectations and assumptions are reasonable, but there can be no
assurance that the expectations reflected herein will be achieved.
Unless legally required, Ashland undertakes no obligation to update
any forward-looking statements made in this news release whether as
a result of new information, future events or otherwise.
Information on Ashland's and Pharmachem's websites is not
incorporated into or a part of this news release.
(TM) Trademark, Ashland or its
subsidiaries, registered in various countries.
FOR FURTHER
INFORMATION:
Investor Relations:
Seth A.
Mrozek
+1 (859) 815-3527
samrozek@ashland.com
Media Relations:
Gary Rhodes
+1 (859) 815-3047
glrhodes@ashland.com
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Ashland Inc. via Globenewswire
Ashland (NYSE:ASH)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ashland (NYSE:ASH)
Historical Stock Chart
From Sep 2023 to Sep 2024