Kraton Performance Polymers Inc. recently announced it has entered into a definitive agreement to acquire all of the capital stock of privately held Arizona Chemical Holdings Corp. for a cash purchase price of $1.37 billion. Arizona Chemical's end-use market exposure is reportedly complementary with that of Kraton, particularly in markets such as adhesives, roads and construction, coatings, and oilfield chemicals.
“This transformational acquisition will extend Kraton's technology and market diversification, while substantially increasing profitability and free cash flow, creating a more robust platform for growth and value creation for our stockholders,” said Kevin M. Fogarty, president and CEO, Kraton. "Our stockholders will benefit from identified pre-tax synergies of $65 million, which we expect to achieve by 2018. Arizona Chemical has a stable and attractive margin profile, with adjusted EBITDA margins in excess of 20% over the past five years and an attractive cash flow profile. On a combined basis, we expect to generate free cash-flow of more than $450 million over the first three years of combined operations, which will be available for debt reduction and allocation to stockholders."
The acquisition is subject to regulatory and other customary approvals and conditions. It is currently expected to close in late 2015 or early 2016.