Ardian's Italmatch bolts on Detrex

Amedeo Goria
15 November 2017

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Italian speciality chemicals business Italmatch Chemicals, backed by private equity firm Ardian, has launched a tender offer for listed US peer Detrex Corporation.

The offer is based on a $27 share price to be paid in cash, according to a statement, and gives the targeted business a market cap of $45.9m. The transaction is subject to the approval by at least two thirds of Detrex's shareholders. At the time of publication, shareholders representing 52% of the shares approved the offer. The merger is expected to close by the end of 2017.

The offer price represents an 8% premium over the closing bid price of the company's common stock on the day before the signing on 10 November.

Currently, Genoa-based Italmatch generates €340m in revenues on a yearly basis, according to a statement. The business expects the merger to boost its product portfolio and synergies, as well as to enhance its presence across the Americas.

Italmatch has 12 manufacturing plants in Italy, Spain, Germany, the UK, China, Japan, and the US, and employs 500 people. The business acquired Sudamfos do Brasil, a Brazilian speciality chemical distribution and marketing company with a reported turnover of €5m, in early November 2017.

In a recent interview with unquote" sister publication Mergermarket, Italmatch CEO Sergio Iorio said the business plans to finalise the acquisition of a water treatment company based in the Asia-Pacific region by the end of the year, as it continues its expansion drive aimed at increasing revenues to €500m over the next 18-24 months.

Furthermore, Iorio said Ardian's exit via an IPO on Borsa Italiana is not likely at this stage, given Italmatch's relatively small size, but several buyers could be interested in the company as a target.

Previous funding
Ardian acquired a controlling stake in the group from Mandarin Capital Partners for an undisclosed sum in June 2014.

Mandarin Capital and industrial firm Malacalza Group acquired the 90% stake Investindustrial held in the business in December 2010.

Company
Detrex is based in Michigan and was founded in 1925. The company operates under the The Elco Corporation brand and manufactures speciality chemicals, focusing on additives for industrial petroleum products and high-purity hydrochloric acid for the semiconductor industry.

The business generated $37.5m in revenues and $1.9m of EBITDA in 2016.

People
Italmatch Chemical Group – Sergio Iorio (CEO).
Detrex – Thomas Mark (chair, CEO).

Advisers
Acquirer – Lincoln International (corporate finance); Dykema Gossett (legal); Giovannelli e Associati (legal).
Vendors – KeyBanc Capital Markets (corporate finance); Clark Hill (legal).