Kraton Corporation, a producer of specialty polymers and high-value bio-based products derived from pine wood pulping co-products, has entered into a definitive merger agreement pursuant to which DL Chemical, a subsidiary of DL Holdings will acquire 100% of Kraton Corporation in an all-cash transaction implying an enterprise value of approximately USD 2.5 billion.
Support Growth of Kraton's Business
Under the terms of the merger agreement, Kraton stockholders will receive USD 46.50 in cash for each share of Kraton common stock they own. As part of the transaction, DL Chemical has conveyed that they have fully committed financing.
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Following an extensive review of a wide range of strategic alternatives focused on maximizing value for the benefit of our stockholders, Kraton's Board has determined that the sale of Kraton to DL Chemical is in the best interest of Kraton stockholders. We believe the transaction provides immediate and certain value for Kraton stockholders and represents an attractive premium of approximately 50% over Kraton's unaffected market valuation as of early July," said Kevin M. Fogarty, Kraton's president and chief executive officer.
"Moreover, DL Chemical has the industry presence and resources to continue to support the growth of Kraton's business on a global scale."
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Consistent with our longstanding goal of maximizing value for the benefit of our stockholders, over the years Kraton's Board and management team have actively evaluated a wide range of strategic alternatives. The announcement marks the culmination of the strategic review process for Kraton, resulting in a transaction that provides significant value for Kraton stockholders. In addition, the scale and strength of the combined company will benefit customers and employees, as it will expand Kraton's global reach while creating a robust platform to further support investment in the existing innovation pipeline and provide for further expansion of sustainable offerings," said Dan F. Smith, chairman of Kraton's Board of Directors.
Ability to Serve Diverse Range of End-markets
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DL Chemical has been highly interested in Kraton's specialty polymer and bio-based chemical business, and this combination will allow the company to provide customers with a wide range of innovative products while adding the ability to serve a diverse range of end markets in over 70 countries worldwide," said Sang Woo Kim, vice chairman and chief executive officer of DL Chemical.
The Merger Agreement was unanimously approved by Kraton's Board of Directors, which has recommended that Kraton stockholders vote in favor of the transaction. The acquisition is subject to certain customary closing conditions, including the receipt of stockholder and regulatory approvals, and is expected to close by the end of the first half of 2022.
J.P. Morgan Securities LLC is acting as an exclusive financial advisor, and King & Spalding LLP is acting as legal counsel to Kraton in connection with the transaction. Goldman Sachs is acting as a financial advisor, and O'Melveny & Myers LLP is acting as legal counsel to DL Chemical in connection with the transaction.
Source: Kraton Corporation