Essex, UK-based Synthomer plc will buy specialty chemical company Omnova Solutions Inc. in a deal announced July 3 worth about $455 million.
Synthomer's offer of $10.15 per share is a premium of 58 percent to Beachwood, Ohio-based Omnova's closing price of $6.42 per share on July 2. In a news release announcing the deal, Onmova CEO Anne Noonan said the offer price represents a 52 percent premium over Omnova's three-month weighted average share price of $6.67. Omnova shares soared 55.1 percent to $9.94 in premarket trading July 3.
The transaction has been approved unanimously by the boards of both Omnova and Synthomer. It is subject to the satisfaction of certain customary closing conditions, including the receipt of regulatory approvals, but "is not contingent on obtaining financing and is expected to close in late 2019 or early 2020," according to the release.
"Omnova complements Synthomer culturally, geographically and by market, while Synthomer's financial position provides for a very strong combined company that will be well positioned to accelerate growth," Noonan said in a statement. She said the deal "presents increased opportunities for the business and its employees to leverage the combined scale, grow more quickly and profitably, and enhance product innovation in ways that will benefit customers and employees."
Acquiring Omnova will help Synthomer bolster its footprint in Europe and Asia and help penetrate into China, Synthomer said in a statement.
Synthomer has about 2,900 employees. It reported sales of $2.1 billion in fiscal year 2018.
Omnova reported fiscal second-quarter earnings and sales that missed Wall Street's expectations. Sales totaled $205.7 million, down a bit from the year-ago total of $206.3 million. Earnings fell about 33 percent to $5.6 million.
Noonan, commenting on the second quarter results, said, "As anticipated, we continued to face challenging economic conditions and volatile markets during the quarter."
Omnova's sales for the last 12 months ended May 31 were about $760 million. The company has a global workforce of about 1,900.