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OMNOVA Q2 Earnings Down; To Be Bought By Synthomer For $10.15/share In Cash

OMNOVA Solutions Inc. (OMN), a manufacturer of polymers, dispersions, elastomers and other speciality chemicals, reported Wednesday lower earnings for its second quarter, with nearly flat net sales.

Further, the company said it has entered into a definitive agreement to be acquired by Synthomer plc (SYNT.L), a British specialty chemical company, for $10.15 per share in cash.

The acquisition values OMNOVA's entire share capital at $473 million or approximately 375 million pounds. The implied enterprise value is $824 million or about 654 million pounds.

The offer price represents a premium of 52 percent over OMNOVA's three-month weighted average share price of $6.67. The acquisition is expected to be earnings accretive in the first full financial year following completion and strongly accretive thereafter.

The transaction has been approved unanimously by the boards of directors of both companies. The deal is subject to the satisfaction of certain customary closing conditions, and is expected to close in late 2019 or early 2020.

In ita statement, Synthomer said it intends to finance the acquisition and related fees and expenses from the gross proceeds of a rights issue of up to 204 million pounds or about $257 million; and drawings under new debt facilities.

In its second quarter, OMNOVA reported earnings per share of $0.12 per share, down from $0.19 last year. Net sales for the quarter were $205.7 million, approximately flat to last year's $206.3 million. Overall volume grew 3 percent benefited from the OMNOVA Portugal acquisition, which offset declines in Performance Materials.

Net sales for Specialty Solutions increased 10.5 percent to $142.3 million. Segment operating profit was $20 million, down from $21.9 million last year.

Net sales for Performance Materials were $63.4 million, down from $77.5 million last year. Volume was down 13 percent.

In light of the potential acquisition, OMNOVA will not host a conference call for its second quarter 2019 financial results.

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