DuPont recently announced that it has entered into a definitive agreement with Advent International to acquire Laird Performance Materials for $2.3 billion, which will be paid from existing cash balances. The transaction is expected to close in the third quarter of 2021, subject to regulatory approvals and other customary closing conditions.
With 2020 revenues of $465 million, Laird Performance Materials is reportedly a world leader in high-performance electromagnetic shielding and thermal management, offering a comprehensive range of performance components and solutions that manage heat and protect devices from electromagnetic interference. The company has a workforce of over 4,300 employees with a global network of 11 manufacturing sites in North America, Europe, and Asia.
"The acquisition of Laird Performance Materials is a significant step in advancing DuPont's strategy to grow as a global innovation leader and premier multi-industrial company," said Ed Breen, DuPont's executive chairman and CEO. "Laird Performance Materials is a strategic and complementary addition to the Electronics & Industrial (E&I) business, and our applied material science expertise together with Laird Performance Materials' industry-leading application engineering capabilities further strengthens DuPont as an essential partner for major electronics OEMs and manufacturers. We look forward to welcoming Laird Performance Materials' highly talented teams. With an expanded global reach and proven operational and technical capabilities, I'm confident the combined E&I team will deliver compelling revenue synergies and further accelerate our journey towards becoming a faster-growing and more profitable company."
The transaction brings together DuPont's technology portfolio in films, laminates, and plating chemistry with Laird Performance Materials' electromagnetic shielding and thermal management solutions. The combined organization will reportedly be a leader in rapidly growing advanced electronics applications supporting smart/autonomous vehicles, 5G telecommunications, artificial intelligence, internet of things, and high-performance computing.
DuPont expects to realize approximately $60 million in pre-tax run-rate cost synergies by the end of 2024, with the majority realized in the first 18 months post-closing. The estimated one-time cost to achieve these synergies is approximately $40 million. After adjusting for one-time costs and deal-related amortization, DuPont expects the deal to be accretive to its operating EBITDA margins, free cash flow, and adjusted EPS within the first 12 months and to achieve high-single-digit ROIC by year five. The enterprise value multiple of the transaction is approximately 15x estimated 2021 EBITDA on a stand-alone basis and approximately 11x including cost synergies.
"This transaction represents another strategic step forward in sharpening our focus and directing our investments towards high-value, high-growth opportunities. We remain committed to a balanced capital allocation policy that delivers strong returns to shareholders and includes organic growth, targeted M&A, and shareholder remuneration," said Breen.