WL Ross Holdings Corp. announced last Monday a definitive agreement to acquire Houston, Texas-based Nexeo Solutions Holdings, LLC, a global distributor of chemicals and plastics and provider of environmental services, from TPG, a global alternative asset firm.
As part of the transaction, TPG will roll over a substantial portion of its existing equity and retain approximately 35 percent ownership. The anticipated initial enterprise value, including fees and expenses, is $1,669 million, implying a multiple of 8.4x the Company's estimated Adjusted EBITDA for the calendar year ending December 31, 2016.
Nexeo Solutions, according to the company, is the No.1 plastics distributor and No. 3 chemicals distributor by revenue in North America. Nexeo Solutions distributes products that are used in a broad cross section of manufacturing end markets, including household, industrial and institutional, lubricants, performance coatings (including architectural coatings, adhesives, sealants and elastomers), automotive, healthcare, personal care, and construction. The Company generated revenues of $3.9 billion in the fiscal year ended September 30, 2015. Nexeo Solutions operates in more than 80 countries employing more than 2,450 people in 170 locations.
Upon completion of the transaction, WLRH will change its name to Nexeo Solutions, Inc., and will apply to continue to trade on The NASDAQ Capital Market under the ticker symbols NXEO, NXEOU, and NXEOW. TPG will continue to be represented on the board of directors of Nexeo Solutions. In addition, the board of directors will consist of members of the existing board of directors of Nexeo Solutions as well as other qualified individuals; Wilbur L. Ross, Jr. will serve as Chairman. The current Nexeo Solutions management team, headed by David Bradley, is expected to continue to lead Nexeo Solutions, Inc. following the consummation of the merger.
Wilbur L. Ross, Jr., Chairman of WLRH, said, "We are pleased to partner with TPG to introduce Nexeo Solutions as a publicly listed company. Over the last two years, we have evaluated a number of potential acquisitions for WLRH and we believe this opportunity offers a superior option for our shareholders. 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. We look forward to our partnership with the Nexeo Solutions management team as we work with them to further capitalize on these attractive growth prospects."
"This transaction allows us to align our ownership structure in a way that accelerates our progress towards defining distribution," said David Bradley, President and CEO of Nexeo Solutions. "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."
"It has been our privilege to work with Nexeo Solutions' management since our acquisition of the business from Ashland Chemical in 2011 to build a world-class distribution platform poised for further growth," said Christopher Yip of TPG. "We look forward to remaining a significant owner of the business and a value-added partner to the company as it enters this new phase of growth."
