Platform Specialty to acquire Alent in £1.35bn chemicals deal

Just two and a half years after pushing for the break-up of UK industrial group Cookson, activist investor Cevian Capital is set to secure a bumper payout.

On Monday, Platform Specialty Products, the US-based speciality chemicals group founded by serial dealmaker Martin Franklin, proposed to buy Alent, a UK company spun out of Cookson, for $2.3bn including debt.

Cevian is the largest shareholder in Alent, and the planned takeover values the speciality chemicals company’s shares at 503p each — a 49 per cent premium to its closing stock price last week. Cevian’s near 22 per cent stake is therefore valued at $241.2m.

Cevian also holds a similar stake in Vesuvius, which consists of Cookson’s design and engineering units, and has a market value of £1.15bn.

The activist investor has agreed to take its payment in Platform Specialty shares, but Alent’s other shareholders have the option to take as much as 21.9 per cent of the deal in stock.

Andrew Heath, formerly president of Rolls-Royce’s energy unit, took over as chief executive of Alent in February after the unexpected departure of Steve Corbett last year. At the time, analysts speculated the move was due to disagreements between Mr Corbett and the board over the future use of the company’s cash.

Shares in Alent had fallen 7.2 per cent over the past 12 months but soared 44.9 per cent on Monday to 489p.

The takeover will allow Platform Specialty, which targets chemicals companies, to combine its MacDermid unit with Alent’s Enthone — both make surface coatings to protect cars, aircraft and other equipment from corrosion.

The scale will allow the US company to take on French oil group Total, which is the market leader in surface chemicals.

Lombard

Alent acquisition catalysed by demerger

A demerger often presages the disappearance of one or both offshoots. The agreed £1.35bn purchase of Alent, a speciality chemicals group cracked from the precursor that was industrial group Cookson, lends support to that theory.

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But the deal is coming at a hefty premium to the industry average, with Platform Specialty paying nearly 14 times Alent’s trailing earnings.

Platform Specialty said it is seeking $50m in annual pre-tax cost savings. Alent had $250m in US tax losses on its balance sheet at the end of 2014, which Platform Specialty hopes can be used to offset future liabilities.

The deal is the latest for British-born corporate raider Mr Franklin, who founded Platform Specialty in 2013 and made its first acquisition with $1.8bn for MacDermid.

Backed by Bill Ackman’s Pershing Square hedge fund, Platform Speciality has in the past year added to its portfolio Arysta LifeSciences for $5.4bn, and OM Group for $365m.

However, the Alent acquisition is likely to propel Platform Specialty’s gearing to above its stated target of 4.5 times net debt to operating profit.

Mr Franklin, a keen marathon runner, is also chairman of Jarden, a roll-up company of consumer products businesses ranging from coffee grinders to fishing rods. It has a market value of $10.1bn.

Most recently, Mr Franklin launched another special purpose acquisition vehicle called Nomad Foods with billionaire Noam Gottesman to acquire frozen foods businesses.

The group acquired Iglo, the maker of Birds Eye fish fingers, for €2.6bn in April, and is in talks to acquire Findus, another frozen foods company.