UPDATE: Allnex Belgium makes 'attractive' proposal to buy Nuplex

Monday 15th February 2016

Allnex Belgium SA has proposed buying Nuplex Industries via a scheme of arrangement at a 44 percent premium to the New Zealand company's recent trading price, to create one of the world's largest makers of coating resins.

Allnex, which is controlled by Boston, Massachusetts-based private equity firm Advent International, would offer $5.55 a share for Nuplex, valuing the target at $1.05 billion. The proposal is indicative, non-binding and conditional.

The price includes any dividends paid between now and settlement of the proposal, it said. The shares surged 35 percent to $5.20 today, having earlier touched a seven-year high of $5.26. With the first-half dividend forecast at 11 cents a share, the shares haven't climbed as high as the proposed offer price, suggesting investors don't immediately see a bidding war ensuing. Nuplex has granted Allnex and Advent a period of exclusivity for six weeks.

Nuplex "has stable, strong businesses in a global environment that is still murky," said Shane Solly, portfolio manager at Harbour Asset Management. The proposal was "understandable", given the pieces of Nuplex that would be of interest to the bidder, although the development probably caught some in the market by surprise, he said. The fact that the shares haven't jumped to the offer price may reflect the conditionality of Allnex's proposal.

Nuplex said it had been in confidential talks with Advent and had initially turned down its offer, but after three revisions the price was now deemed to be attractive.

"After careful examination, the board of Nuplex considers the offer to be attractive for Nuplex’s shareholders," the company said. "As the board believes engaging further with Allnex and Advent is in the best interests of shareholders, Nuplex is entering into advanced discussions and due diligence with the aim to agree a binding scheme implementation agreement."

Any transaction would then need to be voted on by Nuplex shareholders and the company urged them to take no action prior to receiving documentation and the board's recommendation.

“The board believes that this proposal, from a credible trade buyer, is attractive and shareholders should have the opportunity to consider its merits if an agreement can be reached by the parties," said chairman Peter Springford. "We are working with Allnex and Advent to see if the outstanding conditions can be met so that a finalised proposal can be put to shareholders as soon as possible.”

Allnex, formerly Cytec Industries' coating resins business, was acquired by Advent in 2013 for US$1.15 billion, with sales of about US$1.5 billion. It is "a leading global producer of coating resins and additives for architectural, industrial, protective, automotive and special purpose coatings and inks," according to the statement.

Nuplex shares have climbed about 30 percent in the past year, prior to today. The stock is rated a 'buy' based on the consensus of five analysts polled by Reuters.

Nuplex has retained UBS and Bell Gully as advisers.

BusinessDesk.co.nz

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