WOODLAND PARK, N.J. (April 12, 2:15 p.m. ET) — Cytec Industries Inc., a specialty chemicals and materials company based in Woodland Park, announced its plans to acquire the outstanding shares of Umeco plc on April 12.
The all-cash transaction for Umeco, a global provider of advanced composite materials headquartered in the United Kingdom, is valued at $439 million.
The acquisition will allow Cytec's presence in aerospace and industrial applications to grow and allow the company to leverage its position in the field of advanced composite materials.
In a conference call, Chairman, President and CEO of Cytec Shane Fleming, said the company intends to leverage Umeco's presence in Europe and China to benefit global distribution.
“Cytec gets excellent value following a disciplined analysis we conducted of the company while Umeco's shareholders get a premium that reflects the company's recent accomplishments and execution of its growth strategy,” he said.
According to the acquisition overview, the estimated earnings per share accretion for the remainder of 2012 is $0.20 per share, jumping to $0.65 per share in 2013, including synergies.
Cytec will finance the acquisition through cash balances on hand and $210 million drawn under its $400 million credit revolver facility. Fleming said Cytec's initial synergy targets include raw materials, administrative areas and the added revenue, totaling approximately $15 million.
“By bringing together Cytec's materials technology with Umeco's applications development capabilities, we will be uniquely positioned to develop integrated products and solutions with optimized materials, parts manufacturing and design,” he said.
“We believe these sophisticated application development capabilities will be key to facilitating the broad adoption of carbon fiber composites, particularly in the emerging automotive market, enabling Cytec to capture the substantive growth opportunities.”
The acquisition will result in two reporting segments, with Umeco's advanced materials business integrated into a High Performance Industrial Materials segment and Cytec's Engineered Materials segment continuing to focus on aerospace growth.
No significant workforce reductions are expected as a result of the acquisition. Cytec currently employs approximately 1,000 worldwide.
“The addition of Umeco is consistent with our successful history of building on the engineered materials business platform through a combination of strategic acquisitions and organic growth,” Fleming said.
The transaction is subject to the approval of a majority of Umeco's shareholders. As of the conference call, the company had 30 percent shareholder commitment, while both companies' boards of directors have already unanimously approved. The transaction is expected to close in the third quarter of 2012.