Chemicals manufacturer Cabot Corp. (CBT: Quote) agreed Thursday to buy Dutch activated carbon company Norit N.V. from its European private equity owners, Doughty Hanson Group and Euroland Investments B.V., for $1.1 billion. The deal, subject to the U.S., Dutch, and German regulatory approvals, is expected to before end of 2012.
British private equity firm Doughty Hanson purchased an 81 percent stake in 2007, while Dutch private equity firm Euroland Investments bought a 19 percent stake in Norit.
Norit on March 19 filed a Form F-1 registration statement with the U.S. Securities and Exchange Commission for an initial public offering to raise about $200 million, and planed to list on the NYSE under the ticker symbol 'NRIT.' However, reports in April said the company was also exploring a potential sale.
The proposed deal will boost Cabot's specialty chemicals portfolio with a non-cyclical, high growth environmental and purification business as well as high margin business.
"Norit's leading market position, unique technology and strong financial performance is an excellent fit with Cabot's portfolio. This acquisition supports the ongoing transformation of our portfolio to a higher margin, less cyclical, specialty chemicals focused company," Cabot President and CEO Patrick Prevost said in a statement.
The Netherlands-based Norit is the world's largest producer of activated carbon and related services as well as a leader in purification. It produces well over 150 different types of activated carbon products. Norit also offers activated carbon reactivation, carbon change out services, and both granular and powdered carbon systems & equipment.
Norit operates 10 manufacturing facilities throughout the Americas and Europe, employing 760 people. It generated sales of $360 million in the twelve months ended December 31, 2011.
For Norit, the deal will provide it a growth path by gaining access to Cabot's process engineering capability, broad geographic footprint, especially in emerging markets, and extensive material science expertise.
The deal is expected funded by Cabot with a combination of about $200 million of cash and $300 million of borrowings under its existing revolver. The company also plans to issue about $600 million of long-term debt prior to closing of the deal.
Following the closure of the deal, Norit's current CEO Ronald Thompson will continue to lead the business.
Boston, Massachusetts-based Cabot noted that it continues to expect adjusted earnings of $4.50 in 2014 from its base business, and now projects annual revenue growth in the range of 10 to 12 percent.
Meanwhile, Cabot also projects earnings accretion from the deal in a range of $0.20 to $0.25 per share in fiscal year 2013 and $0.30 to $0.40 per share in fiscal year 2014, excluding one-time costs. The deal will also see about $50 million of cash tax synergies related to net operating losses.
"The acquisition of Norit is a natural extension of our core R&D and applications development competencies. Norit is the leader in purification and we are looking forward to the Norit team joining Cabot," Prevost added.
CBT closed Wednesday's regular trading session at $37.97, down $0.45 on a volume of 0.13 million shares, lower than the three-month average volume of 0.36 million shares.
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by RTT Staff Writer
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