AVON LAKE, OHIO (Oct. 3, 9:10 a.m. ET) — PolyOne Corp. plans to acquire ColorMatrix Group Inc., a supplier of liquid colorants, additives and fluoropolymers, for $486 million.
According to Avon Lake-based PolyOne, ColorMatrix had sales of nearly $197 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of $43.6 million in the 12 months that ended last June 30.
“Since 2002, ColorMatrix has organically increased EBITDA at an annualized growth rate of 16 percent, and our purchase price of $486 million recognizes the earnings and growth potential of this specialty business,” Stephen Newlin, PolyOne chairman, president and CEO, said in a statement.
Newlin said PolyOne officials “believe we can accelerate this growth by leveraging our global scale and through additional investment in commercial resources” at ColorMatrix.
Newlin said the addition of ColorMatrix means more than 50 percent of PolyOne's operating income now will be derived from its specialty businesses, “compared to only 2 percent in 2005.”
Robert Patterson, PolyOne executive vice president and chief financial officer, said the acquisition of Berea, Ohio-based ColorMatrix not only will accelerate its specialization strategy, “it also expands our geographic presence in Asia and Brazil and creates an entry point into Russia.” About 70 percent of ColorMatrix's revenues are outside North America, according to PolyOne.
PolyOne said it intends to finance the purchase price of $486 million, which includes transaction tax benefits of $10 million, with a combination of cash on hand and the addition of approximately $300 million of long-term debt.
“Net of interest expense on the long-term debt, and the incremental investments in commercial resources, we expect ColorMatrix to be modestly accretive to earnings in 2012 (by two cents to three cents a share) and to add approximately 10 cents to 12 cents per share in 2013,” Mr. Patterson said.
PolyOne said the acquisition is subject to regulatory approvals and is expected to close late this year. PolyOne said its management will discuss the acquisition in more detail during its regularly scheduled third-quarter earnings conference call set for Oct. 26.