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Chemtura to sell agrochemicals unit for $1 billion

04.18.2014  | 

Platform Specialty Products, a chemicals company co-founded by billionaire Nicolas Berggruen and backed by hedge fund manager Bill Ackman, agreed to buy the agrochemicals business for about $1 billion.

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By SIMON CASEY and DAVID WELCH
Bloomberg

Platform Specialty Products, a chemicals company co-founded by billionaire Nicolas Berggruen and backed by hedge fund manager Bill Ackman, agreed to buy Chemtura's agrochemicals business for about $1 billion.

Chemtura will get about $950 million in cash and 2 million shares of Platform’s common stock, Miami-based Platform said in a statement. The purchase is expected to be funded through a combination of debt and cash on hand and will close in the second half of the year, it said.

The deal is the second to be announced since Platform first sold shares to the public in May. It bought closely held MacDermid Group for $1.8 billion in October. In a conference call to discuss that deal, Platform co-founder and chairman Martin E. Franklin, said it planned to acquire a “portfolio” of companies and was targeting makers of chemicals used in oilfield services, adhesives, energy catalysts and water treatment.

The Chemtura unit’s products include insecticides, herbicides and fungicides. Last year it had adjusted earnings before interest, taxes, depreciation and amortization of $101 million.

Platform still plans to acquire more companies and is focused on makers of blended chemicals, CEO Dan Leever said in a phone interview. Blended-chemical plants can have costs of about 10% of factories that make the virgin chemicals used in blending, he said.

‘Big Appetite’

Lower capital costs help improve Platform’s cash flow, Leever said, so that it can continue to do more acquisitions, either smaller companies or larger deals like Chemtura.

“We have a big appetite,” he said.

Ackman’s Pershing Square Capital Management is the largest shareholder in the company with a 28% stake, according to data compiled by Bloomberg.

Barclays and Lazard are Platform’s advisers on the deal and Greenberg Traurig is its legal adviser. Barclays is also providing financing. Morgan Stanley is Philadelphia-based Chemtura’s financial adviser and Debevoise & Plimpton is its legal counsel.



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