The U.S. Department of Justice has allowed the sale of the K+S Americas operating unit, which comprises the company’s Americas salt business, to Stone Canyon Industries Holdings LLC, Mark Demetree and Partners to proceed, K+S said in a statement on April 19.
Now that K+S no longer anticipates any antitrust hurdles, it said it expects the closing of the sale to be “predominantly probable” around April 30, 2021.
The company puts the Americas unit enterprise value at $3.2 billion, corresponding to 13.4 times the 2020 EBITDA of $239 million, it said.
“Taking into account debt and cash, the purchase price is approximately €2.5 billion. Payment will be made in cash,” said K+S.
The sale of the America’s operating unit to the U.S.’ Stone Canyon Industries was agreed to last October (GM Oct. 9, 2020). Back in November, K+S Chairman Burkhard Lohr at an earnings call told analysts that U.S. antitrust clearance of the deal was “the main step K+S had to take between signing and closing”(GM Nov.13, 2020), but last month the company had expressed optimism about how the sale was progressing and anticipated closing by this summer “at the latest,” or “even before June” (GM March 12, p. 28).
The Americas operating unit mainly comprises Morton Salt (USA), acquired by K+S in 2009 for $1.675 billion (GM April 6, 2009), and K+S Windsor Salt (Canada), also acquired in 2009. The unit also comprises K+S Chile, formerly known as the Chilean company SPL, acquired by K+S in 2006.
K+S said the proceeds of the sale will be used exclusively to reduce company debt. K+S’ net debt-to-EBITDA ratio had deteriorated to 7.2x as of Dec. 31, 2020, compared with 4.9x at the end of 2019
Baader Helvea analysts see the U.S. go-ahead as “clearly positive” as closing the deal will “significantly deleverage” K+S’ balance sheet, Bloomberg reported.
Following the divestment of the Americas operating unit, the business of K+S’ Communities and Consumers business segments will be reduced, and K+S said in March it was combining the two segments into its Industrial business segment to form the newly created Industry+ customer segment. The Agriculture customer segment remains unchanged, as the sale of the Americas unit has no impact on the business.