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M&As: HIG buys Avient’s distribution business for US$950 mn; Element acquires Singaporean testing service provider

M&As: HIG buys Avient’s distribution business for US$950 mn; Element acquires Singaporean testing service provider

Materials supplier Avient Corporation says that it has entered into a definitive agreement to sell its Distribution business to an affiliate of private equity firm HIG Capital for US$950 million in cash, subject to regulatory approval. It had in April announced it was exploring a sale of its Distribution business, in connection with announcing an agreement to acquire the Protective Materials business of DSM for US$1.5 billion. The company recently completed that process, culminating in this recent announcement. 

The distribution unit racked up sales of US$1.6 billion in 2021 and sells resins made by other companies.

"As expected, there were multiple buyers interested in acquiring the Distribution business, and it was a competitive process," said Robert M. Patterson, Chairman/President/CEO, Avient Corporation. "Ultimately, we selected H.I.G. Capital based on the strength of their proposal, which values the business at approximately 10x LTM EBITDA and includes no financing contingencies. We are also confident that H.I.G. will make an excellent home for the Distribution business and a good partner for Avient as both a supplier and a customer." 

The company noted that after-tax proceeds of approximately US$750 million from the sale will be used to pay down near-term maturing debt. Pro forma for the sale of the Distribution business and the forthcoming acquisition of DSM's Protective Materials business, net debt to adjusted EBITDA leverage will be approximately 2.8x at the end of the year.

Patterson added, "The sale of the Distribution business and acquisition of DSM Protective Materials represent the next steps in our specialty transformation that began over a decade ago. We are excited about our future as a pure play specialty formulator of sustainable solutions." 

In accordance with US GAAP, the company expects the Distribution business will be classified as "held for sale" and reported as a discontinued operation in future filings. 

The sale is subject to satisfaction of regulatory requirements and other customary closing conditions.

Avient employs approximately 8,800 associates and is a founding member of the Alliance to End Plastic Waste.

In other news, UK-based testing services firm Element Materials Technology has acquired testing, inspection, calibration and certification provider, Singapore Test Services (STS), a subsidiary of ST Engineering. It adds that it strengthens Element’s position and growth plans in Southeast Asia. Terms were not disclosed. Earlier on, Element also acquired Fosta Group, a geotechnical instrumentation and soil investigation specialist.

STS, and its team of 110 experts, supports customers in a diverse set of industries, including aerospace, energy, built environment and manufacturing. Their services include materials testing, chemical and environmental testing, calibration and certification.

Matt Hopkinson, Executive Vice President of EMEAA at Element, said: “STS has a strong suite of capabilities and serves a diverse and global customer base, including a number of blue-chip companies. This is an exciting step for Element and, when combined with our wider capabilities and strengths, provides opportunities for organic growth. This acquisition will also help build our business in Singapore, which was also bolstered by our recent acquisition of Fosta Group, a leading geotechnical instrumentation and soil investigation specialist.”

Lim Kok Ann, President of Land Systems, ST Engineering, said: “We are pleased that we have found a good fit for Singapore Test Services. Element, as a leading provider of testing, inspection and certification services, will be a good owner, for our colleagues, customers and other stakeholders.”

Headquartered in London, UK, Element’s.7,000 scientists, engineers, and technologists, work in its global network of over 200 laboratories, support customers from early R&D, through complex regulatory approvals, and into production.

In 2021, Element set out its new environmental commitments, adopting science-based targets and committing to net zero emissions across its entire global business by 2035.

(PRA)


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