WL Ross, a New York-based blank check company backed by billionaire investor Wilbur Ross, will acquire a majority stake in TPG-backed chemicals and plastics company Nexeo Solutions in a deal worth $1.67 billion, including debt, the companies said Monday.
WL Ross Holdings Corp., which went public in June 2014, will acquire a 65 percent stake in Nexeo Solutions Holding LLC through a mix of 35 million WLHR shares and $1.66 billion in cash and assumed net debt, according to a statement. TPG will maintain a 35 percent stake in the transaction.
Following the transaction, WLRH plans to operate under the name Nexeo Solutions Inc. and will apply to continue to trade its common stock on the Nasdaq Capital Market under the symbol "NXEO," according to a statement.
Nexeo Solutions currently ranks as the No. 1 plastics distributor and the No. 3 chemicals distributor by revenue in North America, although the company operates in more than 80 countries. Nexeo Solutions’ products are used in a wide array of end markets, including household, industrial and institutional, lubricants, performance coatings, automotive, health care, personal care and construction, the company said.
WLRH said it weighed several acquisition opportunities over the last two years but settled on Nexeo because of the opportunity for future growth, including through add-on acquisitions.
“Nexeo Solutions presents a unique opportunity to invest in an industry-leading company supported by strong business fundamentals and long-term structural growth trends. Additionally, we believe the company is an ideal platform to further roll up the fragmented chemicals and plastics distribution space, creating significant value for shareholders,” Ross, who serves as chairman of WLRH, said in a statement.
For Nexeo Solutions, the acquisition will give the plastics and chemicals company a pathway toward strong growth, said David Bradley, Nexeo Solutions’ president and CEO, in a statement.
"This transaction allows us to align our ownership structure in a way that accelerates our progress towards defining distribution," Bradley said. "With a strong, centralized operating platform and access to multiple sources of capital, I believe we will be positioned to grow organically and through acquisition."
Bradley and the rest of the current Nexeo Solutions management team will remain at the helm of the company. The company’s board of directors will consist of WLRH, Nexeo Solutions and TPG representatives, and Ross will be the combined company’s chairman.
The cash portion of the transaction is being funded by debt facilities committed to by Bank of America Merrill Lynch, Jefferies Finance LLC and Deutsche Bank.
The deal has been approved by both WLRH’s and Nexeo Solutions’ boards of directors and is expected to close during the second quarter of 2016.
WLRH is represented by Kirkland & Ellis LLP and Skadden Arps Slate Meagher & Flom LLP. Lazard acted as mergers and acquisitions adviser, and Deutsche Bank Securities Inc., Credit Suisse and Bank of America Merrill Lynch acted as equity capital markets advisers.
The Kirkland team was led by corporate partners Andy Calder and William Benitez; debt finance partners Melissa Hutson and Lucas Spivey; and tax partner Russell Light.
The Skadden team includes corporate partner Thomas Ivey, corporate finance partner Gregg Noel, financial institutions M&A partner David Ingles, tax partner Sean Shimamoto, executive compensation and benefits partner Joseph Yaffe and corporate associates Joseph Halloum, Charles Rogerson, Joseph Casey and Christopher Hammond.
Nexeo and TPG are represented by Vinson & Elkins LLP. Jefferies LLC acted as financial adviser.
The Vinson team is led by M&A partner Keith Fullenweider and senior associate Lande Spottswood, capital markets partner Sarah Morgan and tax partner John Lynch and senior associate Lina Dimachkieh, with support from corporate senior associates Shamus Crosby and Scott Rubinsky and associates Claire Campbell, Jessica Lewis, Yong Eoh and Will White and tax associates James Melchers. The team also included finance partner David Wicklund; employee benefits partner David D’Alessandro, senior associates Regina Ibarra and Katherine Mull and associates Alex Farr and Steven Oyler; environmental partner Larry Nettles, counsel Larry Pechacek and associate Matthew Dobbins; antitrust partner William Vigdor, senior associate David Smith and associate Alicia Burns-Wright; real property senior associate Will Russ and associate Nick Buehner; and labor partner Tom Wilson and counsel Martin Luff.
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