Platform Specialty Products Corporation (NYSE:PAH) ("Platform")
announced today that it has signed a definitive agreement to sell
its Agricultural Solutions business, which consists of Arysta
LifeScience Inc. and its subsidiaries (collectively, “Arysta”), for
$4.2 billion in cash to UPL Corporation Ltd., subject to customary
closing conditions, adjustments and regulatory approvals. This
transaction represents the achievement of Platform’s objective of
separating its Agricultural Solutions and Performance Solutions
businesses while establishing a pre-eminent global off-patent crop
protection business. The transaction is expected to close in
late 2018 or early 2019 upon satisfaction or waiver of the closing
conditions. In the context of this transaction, Platform also
announced a planned name change and pro forma financial guidance.
A New Chapter for Platform
The closing of this transaction will start a new phase for
Platform. Consistent with this transformation, Platform plans
to change its name to Element Solutions Inc. (“Element Solutions”
or “Element”), effective at closing of the Arysta
transaction. Element expects to be traded on the New York
Stock Exchange under the ticker symbol “NYSE:ESI.” This newly
named company will comprise the existing Performance Solutions
segment of Platform, a portfolio of market-leading specialty
chemicals businesses focused on attractive segments in the
electronics, industrials and energy end-markets. Element
intends to continue to focus on organic growth from its core
portfolio as well as measured opportunistic acquisitions to build
its capabilities, technologies and product offerings in its
existing and adjacent end-markets.
Use of Proceeds and Pro Forma Financial
Outlook
Platform expects net cash proceeds of approximately $4.2 billion
from the sale of Arysta, which Element plans to use primarily to
pay down existing debt. At the closing of the Arysta
transaction, Element expects to have net debt of less than $1
billion or less than 2.5 times pro forma trailing twelve month
adjusted EBITDA. Element’s new long-term net leverage target
range would be 3.0 to 3.5 times adjusted EBITDA, which provides
significant incremental capacity for value accretive capital
allocation, including a combination of measured acquisitions and
share repurchases. To that extent, the Board has authorized
up to $750 million in share repurchases, conditioned on the closing
of the Arysta transaction. Shares repurchases will be made
opportunistically at the discretion of Element.
In the context of the Arysta transaction and the formation of
Element Solutions, Platform intends to merge its corporate
functions with those of its Performance Solutions segment.
The divestiture of Arysta and this related reorganization are
expected to generate approximately $25 million of estimated annual
run-rate cost savings in the next 12 to 18 months. Based on
Platform’s previously-announced 2018 adjusted EBITDA guidance1 and
adjusting for the Arysta transaction as well as the annualized cost
savings from the related reorganization, Element expects pro forma
adjusted EBITDA from continuing operations to be in a range of $450
million to $470 million on an annualized basis. Going
forward, Elements Solutions expects to be positioned to grow
adjusted EBITDA in the high-single digits annually.
1 Existing 2018 Adjusted EBITDA guidance range of $425 million
to $445 million, which excludes any contribution from Arysta but
includes the corporate overhead to support both the Agricultural
Solutions and Performance Solutions segments. Arysta is
expected to be reported as a discontinued operation beginning with
Platform’s quarterly report on Form 10-Q for the three and nine
months ended September 30, 2018.
Management Commentary
Chief Executive Officer Rakesh Sachdev said, “This transaction
marks an inflection point for Platform. At closing, we will have
achieved our separation and the objectives associated with it –
setting up Arysta for long-term success and improving the balance
sheet of Platform to position the company well for future growth.
We will have a terrific portfolio of businesses at Element
Solutions, an outstanding team and numerous opportunities in front
of us. With a more nimble footprint, focused portfolio and
vastly-improved balance sheet, the anticipated strategy for our
next chapter will be a balance of efficient operations, above
market organic growth and prudent capital allocation. We plan
to emphasize operational excellence, running our best-in-class
businesses efficiently and for profitable growth, and measured
acquisitions in existing markets and adjacencies where we have
market expertise and synergies to compound value creation for our
shareholders. Upon closing, the combination of our corporate and
Performance Solutions teams is expected to create a more efficient
enterprise. It will be an exciting next phase for our
company.”
Nichelle Maynard-Elliott to join the Platform Board of
Directors
Effective August 15th 2018, Nichelle Maynard-Elliott will join
the Platform Board of Directors. Ms. Maynard-Elliott
currently serves as the Executive Director of Mergers &
Acquisitions at Praxair, Inc. Prior to joining Praxair in
2003, Ms. Maynard-Elliott was a practicing lawyer.
Chairman Martin E. Franklin commented, “We are pleased to
welcome Nichelle Maynard-Elliott to our board next month.
With her strong relevant experience in chemicals, acquisitions and
law, she is a great fit with our existing board members, and I
expect her to make a meaningful and positive contribution as a
director of Platform in the future.”
Conference Call
Platform will host a webcast/dial-in conference call to discuss
the transaction and these other announcements at 8:30 a.m. (Eastern
Time) on July 20, 2018. Participants on the call will include
Martin E. Franklin, Chairman; Rakesh Sachdev, Chief Executive
Officer; and Benjamin Gliklich, Executive Vice President –
Operations and Strategy.
To listen to the call by telephone, please dial (855) 357-3116
(domestic) or (484) 365-2867 (international) and provide the
Conference ID: 4999088. The call will be simultaneously webcast at
www.platformspecialtyproducts.com.
A replay of the call will be available for three weeks shortly
after completion of the live call
at www.platformspecialtyproducts.com.
Non-GAAP Measures
This press release includes non-GAAP measures, such as
annualized pro forma adjusted EBITDA and pro forma adjusted EBITDA
guidance. These non-GAAP measures should be considered in addition
to, not as a substitute for, measures of financial performance
prepared in accordance with GAAP. “Pro forma” information in this
press release excludes the results of the Arysta business by
assuming a transaction closing on January 1, 2018 and includes the
full benefit of approximately $25 million of estimated run-rate
cost savings expected to be delivered in 2019. This pro forma
information, however, should not necessarily be, and should not be
assumed to be, an indication of the results that may have been
achieved had the Arysta transaction been completed on January 1,
2018, or results that may be achieved in the future. This pro forma
information may also not be comparable to the pro forma information
required to be provided in connection with the transaction closing.
Further, Platform only provides adjusted EBITDA guidance on a
non-GAAP basis and does not provide reconciliations of such
forward-looking non-GAAP measure to GAAP due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliations, including adjustments that
could be made for restructurings, refinancings, divestitures,
integration and acquisition-related expenses, share-based
compensation amounts, nonrecurring, unusual or unanticipated
charges, expenses or gains, adjustments to inventory and other
charges reflected in the reconciliation of historic numbers, the
amount of which, based on historical experience, could be
significant.
About Platform
Platform is a global and diversified producer of high-technology
specialty chemicals and a provider of technical services. The
business involves the formulation of a broad range of
solutions-oriented specialty chemicals, which are sold into
multiple industries, including automotive, agriculture, animal
health, electronics, graphic arts, and offshore oil and gas
production and drilling. More information on Platform is available
at www.platformspecialtyproducts.com.
Forward-looking Statements
This press release contains forward-looking statements,
including, but not limited to, statements related to the planned
sale of Arysta and the timing for completion of this transaction;
the ability of the parties to close this transaction, including
obtaining regulatory approvals and meeting other closing
conditions; use of proceeds; share repurchases, conditioned on the
closing of the transaction; business strategy and financial outlook
following the closing of the transaction, including net debt,
long-term net leverage target range, estimated annual run-rate cost
savings, pro forma adjusted EBITDA and pro forma adjusted EBITDA
guidance on an annualized basis. Actual results could differ from
those projected due to numerous factors, including, without
limitation, the parties’ ability to successfully complete the
proposed separation; the timing for completion; adverse effects on
the parties' business operations or financial results; market
volatility; legal, tax and regulatory requirements; unanticipated
delays and transaction expenses; the impact of the transaction on
Platform's employees, customers, suppliers and lenders; the
diverting of management's attention from Platform's ongoing
business operations; and the possibility of more attractive
strategic options arising in the future. Additional information
concerning these and other factors that could cause actual results
to vary is, or will be, included in Platform's periodic and other
reports filed with the Securities and Exchange Commission,
including Platform's annual report on Form 10-K for the fiscal year
ended December 31, 2017. These forward-looking statements
are made as of the date of this press release and are based on
management's estimates, assumptions and expectations with respect
to future events and financial performance. Platform
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
CONTACT:
Investor Relations Contact:
Carey DormanVice President, Treasurer and Investor
RelationsPlatform Specialty Products Corporation1-561-406-8465
Media Contact:
Liz CohenManaging DirectorKekst 1-212-521-4845
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