Univar to acquire Nexeo for US$2 bn; may divest plastics business

Chemical distributor Univar Inc is to acquire smaller rival Nexeo Solutions Inc for about US$2 billion in a cash-and-stock deal to expand its presence in North America.

Univar also said it will evaluate alternatives for Nexeo’s plastics business, including a divestiture. The business accounted for half of Nexeo’s total revenue in 2017.

Univar added that the Nexeo transaction would add to its earnings and cash flow in the first full year and generate US$100 million of annual cost savings by the third year following the deal, expected to close in the first half of 2019.

Nexeo, which distributes chemicals and plastics, was bought two years ago for about US$1.6 billion by a company run by Wilbur Ross, the US Secretary of Commerce.

Univar's President/CEO, David Jukes, said: "This transformational combination is designed to create the premier global chemical and ingredients distributor, with exciting opportunities for our customers, suppliers, employees and investors. Together, we will drive growth and shareholder value with the largest North American sales force in chemical and ingredients distribution, the broadest product offering, and most efficient supply chain network in the industry."

The transaction has been unanimously approved by the Boards of Directors of both companies, and is anticipated to close in the first half of 2019, subject to the approval of both Univar and Nexeo shareholders, as well as receipt of regulatory approvals and satisfaction of other customary conditions. Nexeo's key stockholders, TPG and First Pacific, have agreed to provide consent for the proposed transaction.

Univar said it intends to finance the cash portion of the transaction and refinance Nexeo's existing debt with a combination of available cash and bank financing, for which it has received commitments.

Consistent with its focus on chemicals and ingredients distribution, Univar has hired an external advisor to evaluate strategic alternatives for Nexeo's plastics business, which may include a potential divestiture. Nexeo's Plastics business is a distributor of prime thermoplastic resins and other products supporting OEMs, moulders and design firms around the world, and will represent less than 10% of the combined companies' earnings.

Founded in 1924, Univar is a chemical and ingredient distributor, Univar operates hundreds of distribution facilities throughout North America, Western Europe, Asia-Pacific and Latin America.

(PRA)

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