TAGS: Decorative Cosmetic
Elementis plc (Elementis) announces that it has agreed to sell its Chromium business to Yildirim Group for an enterprise value of USD 170m.
The transaction includes the transfer of environmental liabilities of dollar 35m and other liabilities of dollar 8m, with the total cash proceeds on completion expected to be around dollar 119m before tax, after all transaction costs and subject to customary closing working capital adjustments.
Transaction is Expected Before the End of Q1 2023
The transaction is subject to US regulatory approval, which is expected before the end of Q1 2023.
The sale follows the strategic review of the Chromium business announced in April 2022. In the twelve months to 30 June 2022, the Chromium business reported Sales of dollar 171m and Adjusted Operating Profit of dollar 14m (including dollar 7m of Group costs allocated to Chromium). The transaction values the Chromium business at 7.3 times EBITDA (12-months to 30 June 2022). The transaction will result in a gain on disposal, and a tax charge of approximately dollar 12m. The majority of the Group costs previously allocated to Chromium are expected to be phased out by the end of 2023.
Following the sale of the Chromium business, Elementis will continue to implement its strategy built on innovation, growth and efficiency, with a portfolio now fully focused on premium specialty products. In the twelve months to 30 June 2022 this portfolio delivered underlying sales growth of 14%, adjusted operating profit of dollar 125m, and an adjusted operating margin of 17.0% (excluding corporate costs).
The cash proceeds from the sale will be used to reduce the Group’s Net Debt, in line with the capital allocation priorities. Group Net Debt at 30 June 2022 was $393m, representing 2.4x EBITDA (excluding the impact of IFRS16), and pro-forma Net Debt/EBITDA (after reflecting the Chromium transaction) was 2.0x, closer to the Group’s medium-term target of 1.5x.
Paul Waterman, CEO of Elementis commented, “Whilst Chromium has been a part of Elementis for many years, our strategic review concluded that the interests of all stakeholders would now be best served by a sale of the business. Our Personal Care, Coatings and Talc businesses are focused on developing advantaged, high-value products to drive revenue growth and margin expansion.”
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Going forward, I’m confident the focused implementation of our Innovation, Growth & Efficiency strategy positions us to deliver on our medium-term financial objectives and generate significant shareholder value. Chromium is an attractive business with a strong market position, but it increasingly sat outside of this strategic framework. We are confident that Yildirim will take the business forward in the best long-term interests of its customers and employees.”
A virtual presentation for investors and analysts will be held 30 November 2022. The presentation will be webcast and a copy of this announcement can also be found on this website.
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Source: Elementis
