HEXPOL acquires global rubber compounding group Excel Polymers

HEXPOL acquires global rubber compounding group Excel Polymers

Press release, Malmö, Sweden, 18 October 2010 08.00 CET

HEXPOL has entered into an agreement to acquire global rubber
compounding group Excel Polymers LLC.

Summary

  · HEXPOL acquires Excel Polymers, a global rubber compounding group.
  · Cash purchase price of 212,5 MUSD on a cash and debt free basis. The
purchase price will be  paid upon completion of the acquisition which is
estimated to occur at the end of November 2010.
  · The acquisition will further strengthen HEXPOL's position as a world
leading polymer materials compounding group. Significant synergies are
expected to arise from the transaction especially on the cost side.
  · The acquisition is fully financed via bank facilities. HEXPOL
intends to pursue a rights issue corresponding to approximately 550 MSEK
as soon as practically possible following completion of the acquisition.

 

Description of Excel Polymers

Excel Polymers is a leading global supplier of performance elastomer
solutions, offering a comprehensive portfolio of compounded polymer
materials, performance additives and value added services to rubber
parts manufacturers.

Excel Polymers has an extensive breadth of compounding capabilities and
the global production footprint consists of eight manufacturing
facilities strategically located in the US, China, Mexico and United
Kingdom.

The company offers formulations and products to a diversified group of
end markets including general industrial, contruction, automotive,
printing, heavy machinery, oil&gas and consumer.

Excel Polymers is expected to report sales of approximately 350-360 MUSD
and EBITDA of approximately 34-35 MUSD in 2010.

Excel Polymers is headquartered in Solon, Ohio, USA and employs
approximately 800 people in the US, Mexico, UK and China. In 2009, sales
amounted to 284 MUSD and EBITDA to 21 MUSD.

 

 

Background and reasons for the transaction

With the transaction HEXPOL will be the leading global rubber
compounding group with expertise and manufacturing presence in 9
countries with 24 manufacturing entities.

“With the acquisition of Excel Polymers we are improving our
capabilities and manufacturing footprint in order to service our
customers on global reach. Our customers will experience the combination
of global reach and local personalized service as we reinforce our theme
“think globally, act locally”. We are excited about the enhanced
technology resources, capabilities and competences.” says HEXPOL CEO
Georg Brunstam.

 

The transaction in brief

Completion of the transaction is subject to regulatory approvals and
other customary conditions. Under the terms of the agreement, HEXPOL
will pay a cash purchase price of 212,5 MUSD for Excel Polymers on a
cash and debt free basis.

The transaction is expected to be earnings accretive from closing and is
expected to generate significant synergies, mainly on the cost side.
Synergies, on a pre-tax basis, are expected to amount to approximately 5
MUSD in 2011 and  7 MUSD in 2012.

Integration, transaction and refinancing costs will be charged in the
same quarter as closing. Purchase Price Allocations will be communicated
as soon as the opening balance sheet is established.

 

Transaction financing

Commitments have been secured to finance the acquisition of Excel
Polymers. As soon as practically possible following completion of the
acquisition of Excel Polymers, HEXPOL will pursue a rights issue
corresponding to approximately 550 MSEK.

Melker Schörling AB, HEXPOL's largest shareholder, representing 48,0 per
cent of the votes and 27,2 per cent of the capital in HEXPOL, has
undertaken to vote in favour of the rights issue at an extraordinary
shareholders meeting and subscribe for its pro rata share of the
offering.

Melker Schörling AB has also undertaken to subscribe for approximately
an additional 22,9 per cent in excess of its pro rata share of the
offering. Consequently, subscription commitments for more than 50 per
cent of the intended rights issue have been received.

  

Telephone conference today 18 October at 09:00 CET

HEXPOL's president and CEO Georg Brunstam and CFO Urban Ottosson will
give a presentation today, Monday 18 October at 09:00 CET. To
participate please dial in on +46 (0) 8-213 091 (international call) or
020-213 091 (national call, Sweden) and enter meeting code 917 840 to
participate in the telephone conference.

The presentation will be held in English and the presentation material
will be published on HEXPOL's website.

 

 

 

For further information please contact:

Georg Brunstam

President and CEO

+46 (0) 708 551 251

 

Urban Ottosson

CFO/IR

+ 46 (0) 767 855 144

 

Tracy Garrison

President Hexpol Compounding NAFTA

+ 1 615 708 7855