€10.1bn deal sees AkzoNobel sell chemicals business to Carlyle and GIC
May 2018 | DEALFRONT | MERGERS & ACQUISITIONS
Financier Worldwide Magazine
May 2018 Issue
In a transaction with an enterprise value of €10.1bn, AkzoNobel has sold 100 percent of its specialty chemicals business to US private equity group Carlyle and Singapore-based investment firm GIC.
AkzoNobel’s board of management and supervisory board concluded that a private sale to The Carlyle Group and GIC was in the best interests of the company’s Specialty Chemicals arm, as well as its stakeholders, including employees, shareholders and customers. The deal is the outcome of a thorough dual-track process during which both AkzoNobel’s boards carefully considered both a legal demerger and a private sale.
On the basis of its year-end balance sheet, AkzoNobel expects to receive a cash payment of €8.9bn. Moreover, following deduction of deal and separation related costs, as well as other previously announced liabilities, the net proceeds are expected to be in the region of €7.5bn. The majority of net proceeds are to be distributed to shareholders.
Headquartered in Amsterdam and employing approximately 45,000 people in around 80 countries, AkzoNobel is a leading global paints and coatings company and a major producer of specialty chemicals. The company’s strategy to accelerate growth and value creation by creating two separate companies – Paints and Coatings, and Specialty Chemicals – was first announced in April 2017. AkzoNobel believes that the separation of Speciality Chemicals will generate superior, faster and more certain value, with substantially fewer risks, uncertainties and social costs.
“We are very pleased to announce the sale of Specialty Chemicals to The Carlyle Group and GIC,” said Thierry Vanlancker, chief executive of AkzoNobel. “We believe the business is well positioned to capture growth opportunities and further improve performance. Carlyle has significant experience in the chemicals industry and a proven track record when it comes to health, safety, innovation and sustainability.”
“Specialty Chemicals is a strong and profitable business with highly skilled and motivated employees serving our customers every day with essential chemistry,” said Werner Fuhrmann, chief executive of AkzoNobel Specialty Chemicals. “As a focused chemicals company we will concentrate our efforts and resources to accelerate profitable growth. Moreover, with this transaction, our business has an opportunity to achieve its full potential and we will continue to fulfil the current and future needs of our customers throughout the world.”
As a global alternative asset manager with $195bn of assets under management across 317 investment vehicles, The Carlyle Group has a global presence and the financial capacity to enable the Specialty Chemicals business to achieve its full potential. In addition, Carlyle has extensive experience investing in chemicals, unlocking long-term potential and creating value in its portfolio companies.
“We are pleased to invest in the Specialty Chemicals business and proud to support a business with such a strong heritage,” said Martin Sumner and Zeina Bain, managing directors at The Carlyle Group. “We are committed to growing the business, and building upon its innovation capability, high quality work force and asset base, as well as its world-class sustainability and environmental practices. We look forward to working with the management team to transition the business to a successful independent company.”
Equity for this investment will come from Carlyle Partners VII, Carlyle Europe Partners IV, Carlyle’s longstanding investment partner GIC, which manages Singapore’s foreign reserves, and co-investors.
The transaction is subject to customary closing conditions, including the relevant regulatory approvals and consultation with the relevant employee representative bodies, and is expected to be completed by the end of 2018.
Mr Vanlancker concluded: “This transaction is a key milestone in creating two focused, high performing businesses, to generate value for all stakeholders. We delivered on our commitment to separate the Specialty Chemicals business and did so ahead of schedule.”
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