AXA Private Equity will sell Eliokem International to Omnova Solutions for EUR227.5 million ($302 million). Omnova, the Ohio-headquartered producer of commercial furnishings, plans to combine Eliokem with its performance chemicals segment. The company will raise $425 million in debt to fund the deal, which include all of Eliokem’s debt.
(Reuters) – Omnova Solutions said it plans to buy French chemicals maker Eliokem International from AXA Private Equity for 227.5 million euros ($302 million) to enter new geographies and to strengthen its position in existing markets.
U.S.-based Omnova expects the deal to be neutral to slightly negative to earnings in 2011, but the chemicals maker said it would add to profit in 2012.
The company said it would raise $425 million in long-term debt to fund the deal and repay all of its and Eliokem’s debt.
Omnova added it plans to increase the size of its unused asset-based credit facility to $100 million and expects to have $40 million in cash when the deal closes by year-end.
As of May, Omnova had total long-term debt of $140 million, and $42 million of cash on its balance sheet.
Omnova, which plans to integrate Eliokem with its performance chemicals segment, said AXA Private Equity, a unit of insurer AXA , had granted it a period of exclusivity.
“Eliokem’s presence in Asia, with over 40 percent of its sales in higher growth emerging markets, and with two manufacturing sites in China and one in India, will accelerate Omnova’s strategy of growing its specialty chemicals platform in this region,” Omnova said.
Eliokem’s sales for the 12 months through May 2010 were about $268 million.
Shares of Omnova, valued at about $310 million, were up 10 percent at $7.49 in pre-market trade. The stock, which is down more than 20 percent from a year-high in July, closed at $6.84 Tuesday on the New York Stock Exchange.
(Reporting by Adveith Nair in Bangalore; Editing by Anne Pallivathuckal)