Platform Specialty Products Corp., West Palm Beach, Fla., announced on July 20 that it has signed a definitive agreement to sell its Agricultural Solutions business, which consists of Arysta LifeScience Inc., Cary, N.C., and its subsidiaries, for $4.2 billion in cash to UPL Corp. Ltd., Mumbai, subject to customary closing conditions, adjustments, and regulatory approvals. Platform announced plans to separate its two businesses – Ag Solutions and Performance Solutions – last fall (GM Sept. 1, 2017) with the sell-off of Arysta. Bloomberg reported last month that a consortium led by UPL was the finalist to acquire Arysta (GM June 29, p. 26).
“We decided to separate our businesses last year in order to position both the Performance Solutions and Agricultural Solutions businesses for future growth and additional compelling value creation opportunities,” said Platform Chairman Martin Franklin. “This transaction with UPL creates an agricultural chemicals powerhouse with highly complementary capabilities. The future is bright for these businesses, and we are excited to see what the two combined companies can accomplish.”
The Ag Solutions unit supplies added-value nutrients, biostimulants, insecticides, fungicides, and herbicides, focusing on high-value specialty crops and non-conventional crop protection, with significant exposure to fruits, vegetables, nuts, and other non-row crops. It also claims to have the number two position in the fast-growing bio solutions market.
“The acquisition of Arysta is a transformational transaction for UPL,” said Jai Shroff, UPL Group CEO and executive director. “Arysta has a differentiated position in the crop protection market given its focus primarily on specialty applications and tailored local solutions. This is in line with our long-term vision of becoming a premier global provider of agricultural solutions designed to secure the world’s long-term food supply. This transaction is a ‘perfect match,’ with powerful synergies across geographies, crops, and products, strengthened through best-in-class manufacturing and differentiated R&D capabilities.”
Following the acquisition, UPL is expected to have $5 billion in sales, and the acquisition is expected to drive $200 million in annual synergies. For the year ending March 31, 2018, Arysta’s adjusted EBITDA was $424 million on revenues of $2 billion.
The transaction is backed by a $1.2 billion equity investment by Abu Dhabi Investment Authority (ADIA) and U.S.-based private global investment firm TPG. Each will contribute $600 million, for a combined 22 percent stake in UPL.
Platform CEO Rakesh Sachdev told analysts that he is not too concerned about regulatory challenges. “There’s minimal overlap. What UPL brings is solid manufacturing of active ingredients, which we typically outsource. What Arysta brings is the proximity to the customers and the formulation expertise. And I think that’s what makes the combination very powerful.
“Remember this,” he added, “there are very many much larger players in this consolidating industry. And even after the combination of UPL and Arysta, we’ll still be number five.”
The transaction is expected to close in late 2018 or early 2019. Platform will use the proceeds from the sale to pay down debt and authorize $750 million in share repurchases. Platform will change its name to Element Solutions Inc. and trade on the New York Stock Exchange under the ticker ESI.
In other news, Platform also reported that effective Aug. 15, 2018, Nichelle Maynard-Elliott will join the Platform board of directors. She currently serves as Praxair Inc.’s executive director of mergers & acquisitions. Prior to joining Praxair in 2003, she was a practicing attorney.
Despite Maynard-Elliott’s M&A background, Franklin said any acquisitions the new Element Solutions might do in the foreseeable future would not be transformative, but tuck-ins with significant synergistic benefits.