Platform Specialty to acquire Chemtura AgroSolutions for $1 bn

Platform Specialty Products Corporation has entered into a definitive agreement to acquire Chemtura AgroSolutions (CAS), a leading and fast-growing global provider of agrochemicals and seed treatment products, from Chemtura Corporation for approximately $1 billion, consisting of $ 950 million in cash, subject to working capital and other adjustments, plus 2 million shares of Platform's common stock.
 
Chemtura AgroSolutions is a leading provider of seed treatment and agrochemical products for a wide variety of crop applications in attractive geographies. Its portfolio encompasses seed treatments, insecticides, miticides, herbicides, fungicides, plant growth regulators and adjuvants, and is supported by a proven and robust new product pipeline with over 100 new launches in each of the last three years. These products, backed by extensive research and field testing, utilise advanced formulations to enhance crop quality and yield in many specialty markets and are supported by product registrations in more than 100 countries.
 
Martin E Franklin, Platform's Founder and Chairman, said, “When Platform made its initial investment with the acquisition of MacDermid last year, we recognised that the specialty chemicals space was ripe with opportunity for assembling a portfolio of best-in-class companies, and CAS has many of the same attractive business characteristics as MacDermid. CAS' strong positions in niche markets extend our reach into a new vertical, which possesses robust growth dynamics. This is a successful, fast-growing business with an experienced management team, and the additional resources and guidance from Platform's executive leadership should provide CAS with an optimal, long-term home for it to truly thrive.”
 
Platform will pursue a virtual Active Ingredient (AI) model, and Platform and Chemtura have entered into a long-term supply agreement where Chemtura will supply key AI's. Platform will supplement this with select acquisition and licensing of others AI's to take advantage of CAS' global registrations and distribution footprint.
 
Chemtura AgroSolutions has delivered profitable growth and should be immediately accretive by more than 35% to Platform's adjusted earnings, pre-synergies. For the year ended December 31, 2013, Chemtura reported net sales for CAS business of approximately $449 million and adjusted EBITDA of $101 million, representing an adjusted EBITDA margin of 22.6%, which is in line with Platform's margin profile. CAS has demonstrated a strong track record of earnings expansion since the economic downturn, as evidenced by its EBITDA compounded annual growth rate of over 15% from 2009 through 2013, primarily from organic growth.
 
Daniel H Leever, Platform's Chief Executive Officer, commented, “The agrochemicals business perfectly aligns with the key values and characteristics of Platform, and meets Platform's disciplined acquisition criteria. This transaction demonstrates our ability to execute our clearly-defined growth strategy and provides us with a strong position in an attractive new vertical. Like MacDermid, CAS' innovation capabilities and highly-skilled technical and service personnel create a unique value proposition. This 'asset-lite, high-touch' approach is pivotal to Platform's business model and facilitates margin expansion, increased profitability, and significant free cash flow generation to support future growth."
 
Craig Rogerson, Chairman, President and Chief Executive Officer of Chemtura, said, “This sale provides Chemtura's agrochemicals business with a solid and stable home to build on its positive momentum and growth. I fully expect the business, its customers and employees will continue to thrive as part of Platform.”