- Platform has signed a definitive agreement to sell Arysta LifeScience Inc. to UPL Corporation Ltd. for $4.2 billion in cash, subject to customary closing adjustments
- Closing expected in late 2018 or early 2019, subject to regulatory approvals and other customary closing conditions
In a confirmation of earlier reports, Platform Specialty Products Corp. said on July 20 it will sell its Arysta LifeScience Inc. business to India’s UPL Corp. Ltd. for $4.2 billion in cash.
The agreement values Arysta on a debt free, cash-free basis and is subject to customary working capital and other adjustments.
“This transaction represents the achievement of Platform’s objective of separating its Agricultural Solutions and Performance Solutions businesses, while establishing a pre-eminent global off-patent crop protection business. UPL is a global leader in the crop protection market, and this combination would form one of the largest crop protection companies in the world with an integrated, efficient supply chain, formulation expertise and global distribution capability,” according to Platform’s statement.
Jai Shroff, Group Chief Executive Officer and Executive Director of UPL Limited, the parent company of UPL, said, “The acquisition of Arysta is a transformational transaction for UPL. Arysta has a differentiated position in the crop protection market given its focus primarily on specialty applications and tailored local solutions. This is in line with our long-term vision of becoming a premier global provider of agricultural solutions designed to secure the world’s long-term food supply. This transaction is a “perfect match” with powerful synergies across geographies, crops and products, strengthened through best-in-class manufacturing and differentiated R&D capabilities. We are bringing together two winning teams with strong values and successful track records to create a strong platform for our mission of ‘Farmer First’ and sustainable growth. New UPL will focus on making agriculture more sustainable and farmers more resilient to impact of climate change and is committed to speeding progress towards the UN’s 2030 sustainable development goals.”
Platform’s Chief Executive Officer Rakesh Sachdev said, “The combination of Arysta and UPL, two remarkably complementary companies, will create a new paradigm in the crop protection market with an efficient supply chain and formulation innovation capabilities. This new company is positioned to provide strong local customer solutions around the world with selling presences for broad acre and niche crops, supplemented by a leading bio-solutions business. With its scale and capabilities, we believe the combined companies will represent a compelling value proposition for growers, distributors, suppliers and innovation partners in a consolidating market.”
Sachdev continued, “Arysta grew and matured immensely during our period of ownership through acquisitions, integrations and investment. This is a terrific company with robust global sales and innovation capabilities, proven products, and world-class talent. We are thankful for what Arysta accomplished during its time as a part of Platform and for the efforts of its team around the world.”
The closing of this transaction will also mark the culmination of a separation process announced by Platform in August 2017.
Martin E. Franklin, Chairman of Platform, commented, “We decided to separate our businesses last year in order to position both the Performance Solutions and Agricultural Solutions businesses for future growth and additional compelling value creation opportunities. This transaction with UPL creates an agricultural chemicals powerhouse with highly complementary capabilities. The future is bright for these businesses, and we are excited to see what the two combined companies can accomplish.”
A New Chapter for Platform
The closing of this transaction will start a new phase for Platform. Consistent with this transformation, Platform plans to change its name to Element Solutions Inc., effective at closing of the Arysta transaction. Element expects to be traded on the New York Stock Exchange under the ticker symbol “NYSE:ESI.” This newly named company will comprise the existing Performance Solutions segment of Platform, a portfolio of market-leading specialty chemicals businesses focused on attractive segments in the electronics, industrials and energy end-markets. Element intends to continue to focus on organic growth from its core portfolio as well as measured opportunistic acquisitions to build its capabilities, technologies and product offerings in its existing and adjacent end-markets.
Use of Proceeds and Pro Forma Financial Outlook
Platform expects net cash proceeds of approximately $4.2 billion from the sale of Arysta, which Element plans to use primarily to pay down existing debt. At the closing of the Arysta transaction, Element expects to have net debt of less than $1 billion or less than 2.5 times pro forma trailing twelve month adjusted EBITDA. Element’s new long-term net leverage target range would be 3.0 to 3.5 times adjusted EBITDA, which provides significant incremental capacity for value accretive capital allocation, including a combination of measured acquisitions and share repurchases. To that extent, the Board has authorized up to $750 million in share repurchases, conditioned on the closing of the Arysta transaction. Shares repurchases will be made opportunistically at the discretion of Element.
In the context of the Arysta transaction and the formation of Element Solutions, Platform intends to merge its corporate functions with those of its Performance Solutions segment. The divestiture of Arysta and this related reorganization are expected to generate approximately $25 million of estimated annual run-rate cost savings in the next 12 to 18 months. Based on Platform’s previously-announced 2018 adjusted EBITDA guidance1 and adjusting for the Arysta transaction as well as the annualized cost savings from the related reorganization, Element expects pro forma adjusted EBITDA from continuing operations to be in a range of $450 million to $470 million on an annualized basis. Going forward, Elements Solutions expects to be positioned to grow adjusted EBITDA in the high-single digits annually.