Enthone-OMI to be Acquired for $503m
Cookson Group PLC
13 December 1999
COOKSON TO ACQUIRE ENTHONE-OMI FOR $503 MILLION
CREATES WORLD CLASS PWB FABRICATION MATERIALS SUPPLIER
Cookson Group plc ('Cookson'), the international materials technology company,
announces that it has signed a definitive agreement to acquire the Enthone-OMI
group of companies ('Enthone') from Asarco, Inc., a subsidiary of Grupo Mexico
S.A. de C.V., for $503 million (£310 million).
Enthone manufactures speciality chemicals for the electronics, surface metal
finishing and jewellery industries. Enthone has 14 manufacturing sites, 6 R&D
facilities, sales and distribution centres worldwide and employs 1300 people.
Manufacturing facilities are mainly based in North America, Europe and Asia.
Approximately 35% of sales are made to customers in North America, 32% in
Europe and 33% in Asia.
The majority of Enthone's products, which include metalizing chemicals,
plating chemicals, solder masks, surface finishing chemicals and
photo-imageable materials, are used in the fabrication of printed circuit
boards (PCB). This sector of the electronics industry is forecast to grow at
7% to 10% per annum over the next five years. These products are
complementary to the range of chemicals recently acquired from Dexter.
Enthone also manufactures and supplies semiconductor fabrication chemicals to
the high growth semiconductor packaging industry, complementing Cookson
Electronics' existing BGA (ball grid array) spheres activities and Plaskon,
its recently acquired encapsulants business. In addition, Enthone sells
corrosion and wear resistance coatings into the electronics, automotive,
aerospace and decorative jewellery industries, broadening Cookson's presence
in these industries by adding new products not currently supplied by the
Group.
The plan is to integrate Enthone with Polyclad Technologies - Cookson
Electronics' manufacturer of multi-layer laminates - to create a world class
supplier of materials to the PCB fabrication industry. It will extend the
product line to encompass chemicals not currently provided by Cookson
Electronics, resulting in one of the most comprehensive process capabilities
in the market place, covering each major step of the PCB fabrication process.
For the 12 months ended 30 September 1999, Enthone contributed sales of $404
million (£249 million) and operating profit of $40 million (£25 million),
before goodwill amortisation and exceptional items, to the results of Asarco,
Inc. The net tangible asset value at that period end was $161 million (£99
million) and net indebtedness was $0.9 million (£0.5 million). The results of
Enthone have been restated to accord with UK GAAP by including the share of
associate companies' sales and operating profits.
The integration of Enthone with Polyclad Technologies is expected to lead to
substantial synergies. These will be derived from the integration of the
sales, marketing and technical field forces, rationalisation of manufacturing
facilities and streamlining of administrative functions. The integration
programme should be substantially completed by the end of 2000, with at least
$20 million (£12 million) savings being derived from 2001. The total cost of
implementing this programme is expected to amount to approximately $20 million
(£12 million). The acquisition should be earnings enhancing in 2000 before
amortisation of goodwill, and after amortisation of goodwill from 2001.
Consideration is payable in cash, $50 million (£31 million) of which was paid
on signing and the balance of $453 million (£279 million) due on obtaining the
necessary regulatory approvals. The transaction will be financed from the
Group's existing debt facilities. Whilst the acquisition will increase the
Group's borrowings by over £300 million, pro-forma post-acquisition interest
cover for 1999 remains in line with the Group's target level. The Group's
continuing drive to refocus its activities and consequent disposal programme
will contribute towards a reduction in borrowings during the course of 2000.
Commenting on the acquisition, Stephen Howard, Group Chief Executive of
Cookson, said:
'By acquiring Enthone, we will be creating a world class player in the PCB
fabrication industry. The acquisition advances our strategy of supplying
integrated solutions which encompass the full range of products and services
that our Electronics fabrication and assembly customers increasingly desire.
'Enthone brings with it a first class global management team, and the benefits
of combining the business with Polyclad Technologies are clear. It will
further differentiate Cookson Electronics' offering by enabling us to provide
the most comprehensive product range for each step of the PCB fabrication
process. Importantly, Polyclad Technologies will benefit from Enthone's
worldwide distribution network. Furthermore, it will enable us to reduce our
customers' costs by bringing them total solutions rather than just products.
'The acquisition, our largest to date, further underlines Cookson's commitment
to delivering growth and adding value to our shareholders through a stronger
Group focused on our core Electronics, Ceramics and Precious Metals
businesses.'
For further information, please contact:
Stephen Howard Dennis Millard
Group Chief Executive Group Finance Director
Cookson Group plc Cookson Group plc
London WC2N 6HJ London WC2N 6HJ
Tel: 0207 766 4500 Tel: 0207 766 4500
Fax: 0207 747 6600 Fax: 0207 747 6600
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