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Platform Specialty Products Corporation today provided an update on the timing of the expected closings of its previously announced acquisitions of Alent plc and the Electronic Chemicals and Photomasks businesses of OM Group, Inc. (the "OM EC and PM Businesses") and provided further details regarding the financing of these acquisitions. In addition, Platform revised its 2015 guidance issued on August 13, 2015 to reflect further foreign exchange volatility, continued weakness in certain agricultural end markets, and a decision to limit "pre-season" selling activity in its Agricultural Solutions business segment. Additionally, Platform announced that Benjamin H. Gliklich has been promoted from Vice President, Corporate Development, Finance and Investor Relations to become Platform's Chief Operating Officer. Finally, Platform announced that it intends to release its third quarter 2015 financial results before markets open on Wednesday, November 11, 2015.
Acquisition and Financing Update
As previously announced, the closing of Platform's proposed acquisitions of the OM EC and PM Businesses will take place in two stages with the first stage expected within thirty days and the second in early 2016. Platform's acquisitions of the OM EC and PM Businesses have received all required regulatory approvals. The Alent acquisition is also proceeding as expected, with approval from only one regulatory authority outstanding as of the date of this press release.
Platform has sufficient cash, principally from its $483 million June 2015 equity issuance, to fund the acquisitions of the OM EC and PM Businesses. Consideration for Platform's acquisition of Alent is a mix of stock and cash. The stock portion is a fixed number of shares. As disclosed in the joint announcement, dated July 13, 2015 (the "2.7 Announcement"), issued by Platform and Alent, Platform will issue 18,419,738 shares of its common stock to shareholders of Alent as consideration for the acquisition. This partial share alternative is based on a fixed exchange ratio of 0.31523 based on the VWAP of $24.76 on July 10, 2015. At the time of the announcement, the share alternative was valued at approximately $455 million. For the $1.8 billion cash portion of the purchase price, and as announced in the 2.7 Announcement, Platform has an underwritten commitment for long-term debt financing at what it believes to be competitive market rates. The commitment is for a term loan which is to be pari passu with its existing secured debt. As a result, Platform does not need to issue additional equity to finance the closing of the Alent acquisition.
Chief Financial Officer Sanjiv Khattri said, "Despite volatility in the capital markets, Platform has long-term financing and cash on hand to complete the OM Group and Alent transactions. Utilizing the committed financing to pay for the balance of the Alent consideration would result in a leverage ratio of 5.6x - 5.8x net debt to adjusted pro forma EBITDA, based on Platform's revised 2015 adjusted EBITDA guidance, LTM adjusted EBITDA for the OM EC and PM Businesses and Alent, and previously announced synergies1. While this will bring Platform's leverage ratio above our target range of 4.5x net debt to EBITDA, we intend to return to that target range through EBITDA growth and free cash flow generation. We remain committed to the acquisitions of Alent and the OM Group businesses and confident in their strategic rationale and industrial logic."
Chairman Martin E. Franklin commented, "The opportunity for Platform to drive earnings growth in 2016 and beyond through execution, end-market growth, and the realization of synergies is the key focus for our management team. We can only achieve our longer term value creation objectives by making the businesses we acquire better. Acquisitions will be a secondary priority while we execute on these important integrations."
Platform is a global, diversified producer of high-technology specialty chemicals and provider of technical services. The business involves the formulation of a broad range of solutions-oriented specialty chemicals, which are sold into multiple industries, including agrochemical, animal health, electronics, graphic arts, plating, and offshore oil production and drilling.