Deals



Platform Acquisition Holdings Limited to Acquire MacDermid, Incorporated for $1.8 Billion


Posted: 11th October 2013 09:25

Tortola, B.V.I.-October 10, 2013-Platform Acquisition Holdings Limited (LSE: PAH) ("Platform") has entered into a definitive agreement to acquire MacDermid, Incorporated ("MacDermid" or "the Company"), a global provider of high value-added specialty chemicals for approximately $1.8 billion plus contingent consideration. Platform will be renamed Platform Specialty Products Corporation ("PSP"). Following the close of the transaction, PSP expects to complete a listing of its shares on the New York Stock Exchange by the end of 2013. Platform's shares and warrants have been suspended from trading on the London Stock Exchange and it is not expected that trading will resume. It is anticipated that Platform's listing of shares and warrants on the London Stock Exchange will be cancelled on or shortly after the New York Stock Exchange listing is achieved.

MacDermid is a global specialty chemicals company that has offered its customers innovative, dynamic chemistry solutions and technical services for more than 90 years, establishing leading positions in niche segments. The Company serves over 3,500 customers in 24 countries across the electronics, graphic arts, metals, oil production and drilling and plastics finishing industries. MacDermid's innovative culture and core strengths in R&D and technical service accelerate growth and drive margins, while its low fixed cost structure creates resilience through economic cycles.

MacDermid has delivered consistent and strong financial results, including an estimated $742 million in sales and $180 million in adjusted EBITDA for the twelve months ended September 30, 2013. In addition, the Company maintains a robust margin profile, including an estimated gross margin of 51.0% and an estimated adjusted EBITDA margin of 24.3% over the same period. MacDermid generated $148 million in free cash flow in 2012, with a cash conversion ratio of 91.1%. The business historically requires minimal capital expenditures, typically less than 2% of revenue.

MacDermid will continue to be operated as a standalone business by its existing management team under the PSP umbrella. At closing, Platform intends to change the composition of its Board in anticipation of its move from the London Stock Exchange to the New York Stock Exchange. The reconstituted Board of Directors will consist of a deep bench of talent with expertise and experience in building best-in-class public companies and positioning them for success. Martin E. Franklin, Founder and Executive Chairman of Jarden Corporation, will serve as PSP's Chairman, to provide ongoing strategic guidance over the long term. MacDermid's existing executive team will become PSP's new executive team. MacDermid's Chairman and Chief Executive Officer Daniel Leever will become PSP's CEO and Vice Chairman. During Mr. Leever's 35 year tenure at MacDermid, the Company's revenues have increased five-fold and firm value increased 20 fold through strong organic growth complemented by strategic acquisitions. Frank Monteiro, MacDermid's Chief Financial Officer, will become the CFO of PSP.

Martin E. Franklin, Platform's Founder and Director, said, "As we look to build a portfolio of market-leading specialty chemicals businesses, MacDermid is a natural choice to serve as the initial investment and foundation for Platform Specialty Products. MacDermid's heritage and market presence make it a leader within the sector, and this transaction will provide the Company with the tools and resources necessary to reach the next level of success. We will maintain and respect the integrity of the seasoned and skilled management team as well as the MacDermid brand, products and operations, which have achieved consistent and impressive growth. We look forward to this being a successful, long-term partnership and are confident that this transaction will be the first of many milestones we will achieve together."

Dan Leever, MacDermid's Chairman and Chief Executive Officer, commented, "I'm delighted that MacDermid has found a permanent home from which we can achieve our long-term vision of being a leading global specialty chemicals company. Our business is characterized by a blended chemistry manufacturing model that is inherently non-capital intensive and requires high levels of innovation and technical service. This 'asset-lite, high-touch' business model enables us to deliver results to a diversified customer base, resulting in significant free cash flow to support organic growth and growth through acquisitions. Our ability to adapt our technology to changing market trends and demands provides resilience and a robust pipeline for growth. We will continue to execute on this flexible, yet stable model, and are confident the added resources from this transaction will accelerate our growth trajectory. I'd like to thank all of MacDermid's employees for their ongoing dedication and know that they all share in my excitement as we enter into a new, transformative phase."

"Platform was extremely disciplined in reviewing potential opportunities," commented Lord Myners, the independent Chairman of Platform's Board of Directors, adding that, "The MacDermid transaction offers a compelling financial profile and strategic fit that is solidly in line with our acquisition criteria. The Board voted unanimously in favor of entering into the business combination agreement. We look forward to closing the transaction shortly and recommencing trading once the requirements of the U.S. Securities and Exchange Commission and The New York Stock Exchange are satisfied."

The transaction is expected to be funded through proceeds from Platform's previously completed IPO, an amendment of MacDermid's existing first lien term debt and proceeds from a warrant exchange offer to be carried out by Platform. After giving effect to the transaction, the Company net debt to EBITDA leverage ratio is expected to be less than 4X. The transaction is expected to close by the end of October 2013, subject to customary closing conditions.

Barclays acted as financial advisor and Greenberg Traurig acted as legal advisor to Platform on the transaction. Lazard acted as financial advisor to the seller.

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