Investindustrial exits Polynt-Reichhold in buy-back

Following the completion of the transaction, previous Speciality Chemicals International co-owner Black Diamond Capital Management will become the company's controlling shareholder.

The transaction, together with the refinancing of the existing debt, will be financed by approximately €1.3bn in new senior secured and unsecured debt facilities, according to a statement. JP Morgan and Apollo Capital Management have committed to the debt financing, while funds managed by Black Diamond have provided an equity commitment.

The transaction is expected to close within six months, subject to regulatory approvals.

Investindustrial was invested in Polynt-Reichhold via its Investindustrial V fund, which closed on €1.25bn in 2012, through the Global Chemicals newco.

The announcement of a buy-back came as a surprise, given a sale process for Polynt-Reichhold was at an advanced stage as of June. Buyout group Lone Star was in exclusive negotiations to acquire Italy-based Polynt-Reichhold by then, according to a previous report by Unquote sister publication Mergermarket citing three sources familiar with the matter. Investindustrial and Black Diamond awarded exclusivity to the Texas-headquartered private equity firm after collecting refresh bids at the end of May, the sources said.

Lone Star, which was competing with sponsors Apollo Global Management, SK Capital and One Rock Capital Partners towards the end of the process, was understood to have submitted an offer in the region of €2.6bn to acquire the €280m-EBITDA business, one of the sources said. One of the sources described the competing offers at the time as "light", pointing at dampened competition among parties to land the producer of speciality and composite resins.

Mandated adviser Morgan Stanley started distributing information memorandums to prospective buyers in early March, with Investindustrial and Black Diamond seeking as much as €2.5bn for the business, Mergermarket reported at the time.

Investindustrial declined to comment on the sale process when contacted by Unquote.

Previous funding
Investindustrial acquired a majority stake in Polynt for €430m in February 2008. At the time of the take-private, the company generated €600m in revenues with €63m in EBITDA.

Polynt and US-based competitor Reichhold, backed by Black Diamond, merged in 2017 in a deal valued at an estimated €1bn. The GPs retained an equal stake at the time, representing a combined majority share in the business. The Polynt management team led the new group.

The merger created a speciality chemicals group generating a combined turnover of €2.1bn with €200m in EBITDA. According to Unquote sister publication Debtwire, GSO Capital Partners supported the deal with a €625m unitranche loan. Commerzbank also provided debt to support the transaction.

Company
Polynt-Reichhold is a global speciality chemicals manufacturer, generating €2bn in annual sales. Headquartered in the UK, the company manages operations through two regional centres located in Italy (Scanzorosciate, Polynt's historical headquarter) and in the US (Carpentersville, Illinois). The group operates 36 manufacturing facilities worldwide and several R&D centres, with a total workforce of approximately 3,100 employees.

Polynt has roots dating back to 1955 and is headquartered in Bergamo. Reichhold was founded in 1927.

Advisers
Company – Morgan Stanley (M&A); Skadden Arps Slate Meagher & Flom (legal).
Vendor – Slaughter and May (legal); Chiomenti Studio Legale (legal).
Equity – Morgan Lewis (legal).

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