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Croda Announces the Acquisition of Uniqema from ICI

Published on 2006-07-03. Author : SpecialChem

LONDON -- Croda International Plc ("Croda") announces the acquisition of Uniqema, a division of Imperial Chemical Industries Plc ("ICI") (the "Acquisition") for a total consideration of £410 million on a cash and debt free basis. At Completion, Croda will pay ICI £370 million in cash and will assume £40 million of unfunded post-retirement benefit liabilities. As part of the Completion mechanics, there will be an adjustment for working capital and an adjustment for any post-retirement benefit liabilities, which will be funded, net of tax, by ICI.

Uniqema is a global manufacturer and supplier of base oleochemicals and specialities used as additives in a wide variety of consumer care markets. In the year ended 31 December 2005 it generated sales of £626 million, 66 per cent. from specialities and 34 per cent. from base oleochemicals, with EBITDA of £49 million.

The Directors of Croda believe that the Acquisition fulfils a long term strategic goal for the Company, providing an enhanced global platform from which to pursue future growth opportunities.

Highlights of the Acquisition

  • Strengthens Croda's position as a leading global oleochemical specialities manufacturer
  • Strengthens global position in consumer care products
  • Brings complementary products and technologies, e.g. alkoxylates, sunscreens and crop care
  • Strengthens Croda's presence in key growth markets, such as India
  • Expected to be EPS neutral in the year ending 31 December 2007, and significantly EPS enhancing in the year ending 31 December 2008
  • Significant synergies estimated to be at least £20 million per annum in the year ending 31 December 2008
  • Restructuring will create opportunities for additional earnings improvement

Croda has a successful track record of restructuring chemical assets. Over recent years, the current management has led a focused strategic repositioning of Croda's business. Croda's management believes that the application of a similar strategy has the potential to unlock significant value following the Acquisition.

The Acquisition constitutes a "Reverse Takeover" under the UK Listing Rules by virtue of its size and requires the approval of Croda Shareholders, which will be sought at an Extraordinary General Meeting that is anticipated to be held in August. Given that it is a "Reverse Takeover", Croda's Ordinary Shares will be suspended from trading at the time of this announcement, pending the publication of a Prospectus for the Enlarged Group. It is anticipated that the Prospectus will be posted to Croda Shareholders in August 2006 and that trading in Croda shares will recommence shortly thereafter.

The Circular inviting Shareholders to vote at an Extraordinary General Meeting is expected to be posted to Croda Shareholders during August 2006. The Acquisition is subject to Croda Shareholders' approval and obtaining the relevant Competition Clearances.

Croda intends to fund the Acquisition through New Debt Facilities. In addition, Croda may implement an Equity Placing of up to 10 per cent. of its issued share capital, from shares held in treasury, once trading has re-commenced. However, neither the New Debt Facilities nor the Acquisition are conditional upon the Equity Placing.

Commenting on the Acquisition, Martin Flower, Chairman of Croda, said:

"Croda has had a strategy of growing both organically and through acquisition for a long time. We have been very disciplined in looking at possible acquisitions. The Board and I are convinced that this acquisition will create significant shareholder value and provide an exciting platform for Croda's future growth."

Commenting on the Acquisition, Mike Humphrey, Group Chief Executive of Croda, said:

"This is an exciting step change in the Croda growth story. Acquiring Uniqema has clear industrial logic and a compelling financial case. It is a great opportunity for Croda's experienced management team to combine with Uniqema's talented people to create a new company with a great future."

Merrill Lynch is acting as financial adviser and corporate broker to Croda.

This summary should be read in conjunction with the full text of the following announcement.

This statement is not intended to constitute a profit forecast for the financial years ending 31 December 2007 and 31 December 2008, nor for any other period. Nor should the statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial period for Croda. Rather this statement should be construed as a reference to an enhancement above the earnings that might otherwise have been earned during the relevant financial period.

This announcement has been issued by Croda and is the sole responsibility of Croda.

Merrill Lynch is acting for Croda in connection with the proposed Acquisition and no one else and will not be responsible to anyone other than Croda for providing the protections afforded to clients of Merrill Lynch nor for providing any advice in relation to the Acquisition.

This announcement is for information only and does not constitute an offer or an invitation to acquire or dispose of any securities or investment advice or an inducement to enter into investment activity. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire Croda securities in any jurisdiction.

The distribution of this announcement may be restricted by law. Persons into whose possession this announcement comes are required by Croda to inform themselves about and to observe any such restrictions.

This announcement includes 'forward-looking statements'. These forward-looking statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Croda's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to Croda's products and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Croda to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Croda's present and future business strategies and the environment in which Croda will operate in the future. These forward-looking statements speak only as at the date of this announcement. Croda expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Croda's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Source: Croda


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