Ackman-Backed Platform to Buy Chemtura Unit for $1 Billion

Apr 17, 2014 4:29 pm ET

(Updates with closing share price in eighth paragraph.)

April 17 (Bloomberg) -- Platform Specialty Products Corp., a chemicals company co-founded by billionaire Nicolas Berggruen and backed by hedge fund manager Bill Ackman, agreed to buy Chemtura Corp.’s agrochemicals business for about $1 billion.

Chemtura will get about $950 million in cash and 2 million shares of Platform’s common stock, Miami-based Platform said in a statement today. The purchase is expected to be funded through a combination of debt and cash on hand and will close in the second half of the year, it said.

The deal is the second to be announced since Platform first sold shares to the public in May. It bought closely held MacDermid Group Inc. for $1.8 billion in October. In a conference call to discuss that deal, Platform co-founder and Chairman Martin E. Franklin, said it planned to acquire a “portfolio” of companies and was targeting makers of chemicals used in oilfield services, adhesives, energy catalysts and water treatment.

The Chemtura unit’s products include insecticides, herbicides and fungicides. Last year it had adjusted earnings before interest, taxes, depreciation and amortization of $101 million.

Platform still plans to acquire more companies and is focused on makers of blended chemicals, Chief Executive Officer Dan Leever said in a phone interview today. Blended-chemical plants can have costs of about 10 percent of factories that make the virgin chemicals used in blending, he said.

‘Big Appetite’

Lower capital costs help improve Platform’s cash flow, Leever said, so that it can continue to do more acquisitions, either smaller companies or larger deals like Chemtura.

“We have a big appetite,” he said.

Platform gained 1.6 percent to $19.98 at the close in New York today. The shares have risen 43 percent this year.

Ackman’s Pershing Square Capital Management LP is the largest shareholder in the company with a 28 percent stake, according to data compiled by Bloomberg.

Barclays Plc and Lazard Ltd. are Platform’s advisers on the deal and Greenberg Traurig LLP is its legal adviser. Barclays is also providing financing. Morgan Stanley is Philadelphia-based Chemtura’s financial adviser and Debevoise & Plimpton LLP is its legal counsel.

--With assistance from Stephen Cunningham in New York.