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Elementis cuts up-front price of Mondo Minerals acquisition by US$100mln after investor unrest

The FTSE 250-listed firm said it will now buy the business for US$500m on a cash free, debt free basis, down from the US$600m originally agreed
Industrial talc
Elementis will also pay up to €45.7mln in earn-out payments if Mondo achieves certain performance targets over a three-year period

Elementis PLC (LON:ELM) saw its shares fall on Tuesday as the speciality chemicals firm cut the up-front price of its acquisition of industrial talc group Mondo Minerals by US$100mln after the deal was poorly received by investors.

The FTSE 250-listed firm said it will now buy the business for US$500m on a cash free, debt free basis, down from the US$600m originally agreed.

READ: Elementis's talcs deal causes a bit of friction

Elementis will also pay up to €45.7mln in earn-out payments if Mondo achieves certain performance targets over a three-year period ending on 31 December 2020.

It said if all targets are hit, then the full price for Mondo will, therefore, rise to US$553mln.

To finance the deal, the company aims to raise US$230mln from a fully underwritten 1 for 4 rights issue at 152p per share, combined with new US$775mln of bank facilities.

The group also clarified that the expected date of completion of the Mondo Minerals deal is 23 October 2018.

Paul Waterman, Elementis’ CEO commented: "Mondo Minerals is a high-quality business with significant opportunities for future growth. Following engagement with our shareholders, we have agreed terms of a revised deal with Advent that we believe represents compelling value.

“We remain excited by Mondo’s prospects and the significant opportunities we believe this acquisition will unlock for Elementis."

Shares in Elementis, which have fallen by around 17% since the deal was initially announced at the end of June and the group’s acknowledgement investors' concerns at the end of July, were down another 4.4% at 241.60p in early morning trading on Tuesday. 

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