Nuplex receives $1b takeover proposal

UPDATE: Nuplex investors tight-lipped as big gain in prospect

Resins and coatings company Nuplex [NZX: NPX] has received a takeover proposal from a private equity-backed Belgian rival at $5.55 a share, a 44% premium to its Friday close of $3.86.

In a statement, Nuplex’s board said it considered the takeover to be attractive and has entered “advanced discussions” with the bidders.

The indicative non-binding, conditional proposal values Nuplex at $1.05 billion.

Nuplex shares have declined since their one-year high of $4.84 on December 19.

The bidders are Allnex Belgium, a resins maker headquartered in Brussels with a holding company in the tax haven of Luxembourg, and international private equity firm Advent International, based in Boston.

Funds controlled by Advent acquired Allnex in 2013.

The takeover is proposed as a scheme of arrangement, which requires a shareholder vote rather than the on-market acquisition of more than 90% of Nuplex’s shares.

Nuplex said it had been in talks with Allnex and Advent since October last year and had rejected the initial approach.

“Subsequently, after three offer revisions since the initial offer from 30 October 2015, Allnex and Advent have submitted the current proposal, offering improved total consideration of $NZ5.55 a share,” it said.

Nuplex chairman Peter Springford said; “The board is confident that Nuplex management can deliver growth in earnings, particularly from the platform now established in Asia and our new breakthrough technology, Acure. However, the board knows that delivering this growth may take some time and that shareholders may value the certainty of $5.55 per share today, a premium of 44% over our current share price.”

The potential bidders have been given a six-week exclusive due diligence period. The parties have agreed break fees if either decides not to proceed.

“The board believes that this proposal, from a credible trade buyer, is attractive and shareholders should have the opportunity to consider its merits if an agreement can be reached by the parties,” said Mr Springford. “We are working with Allnex and Advent to see if the outstanding conditions can be met so that a finalised proposal can be put to shareholders as soon as possible.”

Shane Solly, portfolio manager at Harbour Asset Management, says Nuplex has stable, strong businesses in a global environment that is still murky.  The proposal was "understandable", given the pieces of Nuplex that would be of interest to the bidder, although the development probably caught some in the market by surprise, he said. The fact that the shares haven't jumped to the offer price may reflect the conditionality of Allnex's proposal.

Nuplex is due to report its half-year result on February 18.

It has retained UBS and Bell Gully as advisers.

In November ratings agency Moody’s issued a credit opinion on Allnex, giving it a corporate family rating of B1, defined as “speculative and high risk”. It said the rating “reflects the company’s high financial leverage, which we expect will remain above 4.0 times …over the next 12 to 18 months”.

Advent acquired Allnex for a reported $US1.03b. Its enterprise value, which includes its debt capital, was $US1.15b at the time, or 7.8 times 2011 earnings before interest, tax, depreciation and amortisation.

- Additional reporting from Businessdesk.

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