BEACHWOOD, Ohio—Synthomer P.L.C.'s acquisition of Omnova Solutions Inc. is now complete, an addition that gives the company a stronger foothold in the U.S. and a platform for even more growth.
Beachwood-based Omnova brings eight U.S. manufacturing sites to the combined company, and 13 such locations around the world. This includes a manufacturing site in China, a first for Synthomer. Omnova makes polymers, dispersions and elastomers, and the acquisition makes Synthomer a global specialty chemicals company.
When the deal was announced last summer, London-based Synthomer said it was paying $10.15 per share for Omnova for a total of $473 million at the time. The enterprise value of the deal, which includes such factors as assumption of debt, put the value of the deal at $824 million based on exchange rates at the time.
"Synthomer now has global reach, a broader product portfolio and increased R&D capabilities with an exciting platform from which to attract talent and invest in future growth," Synthomer CEO Calum MacLean said in a statement.
Synthomer, at the time the deal was first announced, said it was paying 9.6 times Omnova's 2018 earnings before interest, taxes, depreciation and amortization. The company said its net debt would be approximately 2.5 times EBITDA at completion of the deal, with a target to reduce debt to below 2.0 times EBITDA by the end of 2021.
The company also revealed a target of $29.6 million in annual pre-tax cost savings by combining the two operations.
Omnova had annual revenue of $769.8 million and EBITDA of $86.3 million in 2018 and approximately 1,900 employees, Synthomer said when the deal was first announced.
About half of the cost savings will come through a de-listing of Omnova as a public company, head office cost savings, IT alignment and consolidation of group functions. Another 30 percent of the savings will come through operational performance improvement and procurement. The final 20 percent will come through consolidation of regional headquarters and sales offices.
About 50 percent of the cost savings will happen by the end of the first year, with the full amount expected by the end of the third year, according to Synthomer. The company expects those changes will cost $31.6 million to implement.
"The acquisition materially strengthens Synthomer's presence in North America, as well as increases its presence in Europe and Asia, including further penetration into the high growth Chinese market. Synthomer intends to utilize best practices from across the enlarged group to improve productivity and service," the company said.
Synthomer added that Omnova helps give it a strong platform from which to invest in future growth, and makes it a "major worldwide player in water-based polymer solutions with greater customer reach and strong operational capabilities."