Synthomer PLC (LON:SYNT) has agreed to buy US polymers peer Omnova Solutions Inc (NYSE:OMN) for an enterprise value of US$824mln.
The FTSE 250-listed UK firm is offering US$10.15 for each Omnova share, a premium of 58% to the NYSE-listed firm’s closing price on Tuesday. In pre-market New York trading on Wednesday, Omnova shares were up nearly 56% to US$9.95.
READ: Synthomer experienced softer trading in Europe and North America at the end of 2018
Commenting on the deal, Synthomer’s chief executive, Calum MacLean, said: "This transaction is an important step in the continued execution of Synthomer's strategy with an acquisition that is both strategically and financially compelling.
“The acquisition of OMNOVA represents an attractive opportunity to materially expand our international business into North America and expand our presence in Europe and Asia, creating a global speciality chemical company.”
MacLean added: “The Acquisition provides an attractive financial profile with significant expected synergy benefits. Synthomer has been disciplined waiting for the right opportunity to deliver value through our inorganic growth strategy and this acquisition will provide an additional platform for Synthomer to continue to grow into the medium term.”
Upon completion, Synthomer said it expects the deal to add to its earnings in the first financial year after completion and sees annual pre-tax cost savings of US$29.6mln by the end of the third year.
The UK firm intends to part-finance the deal – which is likely to be completed by late 2019 or early 2020 - through a 1-for-4 rights issue at 240p per share to raise up to £204mln (US$257mln), as well as by drawings from new debt facilities
In afternoon trade in London, Synthomer shares had recovered from earlier falls to gain 3.3% at 383.60p.