DuPont to divest engineering polymers business; acquires Rogers for US$5 bn

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Materials firm DuPont is to acquire Rogers Corporation for US$5.2 billion, an engineered materials and components. Rogers boasts application engineering expertise, high-frequency circuit materials, ceramic substrates for power semiconductor devices, and high-performance foams to push DuPont’s position in advanced materials for key growth markets such as clean energy and 5G mobile-phone service; as well as tap into the rapid growth of electric vehicles and advanced auto electronics.

The transaction is expected to close in the second quarter of 2022, subject to customary closing conditions.

Taken together, the deals will deepen the chemical maker’s reach in fast-growing, higher-margin industrial and electronics markets and make its earnings more stable, the Wilmington, Delaware-based company said.

As part of its transformation, DuPont also announced that it intends to divest a substantial portion of its Mobility & Materials segment, which includes Hytrel thermoplastic elastomers, Zytel polyamides and Vamac ethylene acrylic elastomers as well as the company’s stake in the DuPont Teijin Films joint venture, with a combined revenue of US$4.2 billion. Proceeds from the sale will be used to help fund the purchase of Rogers, it said.

Ed Breen, Executive Chairman/CEO of DuPont. “Moving forward, our portfolio will be centered on key pillars – electronics, water, protection, industrial technologies and next generation automotive. We are committed to investing in each of these pillars organically and through strategic acquisitions to maximise our capabilities in areas that enable our customers to grow by delivering next generation technologies and sustainable high value-added solutions. These strategic steps are expected to create tremendous opportunities for DuPont and Rogers employees and unlock significant value for shareholders.”

By focusing the portfolio on high-growth, high-margin businesses closely tied to secular growth areas, the combined transactions are expected to substantially improve DuPont’s top-line growth, operating EBITDA margins and cross-cycle earnings stability, putting us in line with best-in-class multi-industrial peers.

Rogers designs, develops, manufactures and sells high-performance and high-reliability engineered materials and components through its Advanced Electronics Solutions (AES) and Elastomeric Material Solutions (EMS) segments. Headquartered in Chandler, Arizona, Rogers has a workforce of more than 3,500 employees with a global network of 14 manufacturing sites in North America, Europe, and Asia and 2021 expected revenues of approximately US$950 million.

Earlier this year, DuPont acquired Laird Performance Materials, which specialies in advanced electronic materials for autonomous vehicles, in a US$2.3 billion deal.

Breen continued, "Building on our recent acquisition of Laird Performance Materials, the acquisition of Rogers further cements our position as the leading electronic solutions provider in the industry. We are building an unmatched portfolio that is ideally positioned to capitalise on rapid demand acceleration in high-growth markets, including electric vehicles, ADAS, 5G telecommunications and clean energy. Rogers is highly complementary to and aligned strategically with our existing Electronics & Industrial business and is expected to deliver compelling returns over the near and long-term.”

DuPont expects to realise approximately US$115 million in pre-tax run-rate cost synergies by the end of 2023. The cost synergies associated with both the Laird Performance Materials acquisition and the intended Rogers acquisition represent approximately 6% of the combined revenue, including DuPont Interconnect Solutions. The estimated one-time cost to achieve these synergies is approximately US$75 million. DuPont expects the deal to be accretive to its top-line growth, operating EBITDA, free cash flow, and adjusted EPS upon closing. The enterprise value multiple of the transaction is approximately 19x estimated fiscal 2022 EBITDA on a stand-alone basis and approximately 14x including cost synergies.

DuPont has committed financing in place for the acquisition of Rogers. DuPont plans on using a portion of the proceeds from the planned divestiture of a substantial portion of the Mobility & Materials segment to repay all acquisition financing related to Rogers and pursue additional growth opportunities in its remaining key pillars as part of its balanced capital deployment plan.

The businesses within the Mobility & Materials segment that are in-scope for intended divestiture are predominantly those in the Engineering Polymers and Performance Resins lines of business as well as the company’s stake in the DuPont Teijin Films joint venture. The in-scope product lines include, but are not limited to, well known and respected brands such as Zytel, Delrin, Hytrel, Crastin, Vamac and TEDLAR. Combined, these businesses represent approximately US$4.2 billion in revenue and about US$1 billion of operating EBITDA based on full year 2021 estimates.

“Finding an ownership model that appropriately values the leadership positions and deep customer value proposition of the in-scope Mobility & Materials portfolio will position the business for continued success, leveraging its unmatched combination of products, technologies, and operating expertise for the benefits of its employees and customers,” said Breen. “Through unprecedented challenges in the past 18 months, these teams have proven that their unwavering commitment to deliver for their customers, employees and partners has generated solid results and I am confident they are well equipped to expand their leadership positions under new ownership.”


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