DOWNERS GROVE, IL/THE WOODLANDS, TX — Chemical distributors Univar Inc. and Nexeo Solutions Inc. have entered into a definitive agreement for Univar to acquire Nexeo in a cash and stock transaction valued at approximately $2 billion, including the assumption of Nexeo's debt and other obligations, or $11.65 per Nexeo share.
Univar's President and CEO, David Jukes, said, "This transformational combination is designed to create the premier global chemical and ingredients distributor, with exciting opportunities for our customers, suppliers, employees and investors. Together, we will drive growth and shareholder value with the largest North American sales force in chemical and ingredients distribution, the broadest product offering, and most efficient supply chain network in the industry. We expect the transaction to be accretive to earnings and cash flow beginning in the first full year post closing and to generate $100 million of annual run rate cost savings by the third year following close and reduce annual capital expenditures by $15 million immediately."
"By combining the best capabilities, talent and resources from our two companies, we will be even better equipped to deliver superior service and expanded value to our customers and supplier partners. We expect to leverage Univar's leading e-commerce and digital capabilities across Nexeo's financial systems and centralized ERP platform to accelerate the digital transformation already underway at Univar and reduce costs, while enhancing the ease of doing business. Our shared commitment to safety and innovation and our common organization structures provide a strong foundation for a smooth and successful integration," Jukes concluded.
Nexeo's CEO, David Bradley, added, "We share Univar's confidence in the future of our combined enterprise, given the strong strategic alignment across our business models, go-to-market strategies, superior product offerings, and digital capabilities. This combination represents a logical and compelling step forward, consistent with our focus on accelerating growth for the benefit of our customers, employees and suppliers. We are especially pleased that Nexeo's employees are highly valued by Univar, and that our shareholders will be able to participate in the company's future success through ongoing equity ownership."
The transaction has been unanimously approved by the boards of directors of both companies and is anticipated to close in the first half of 2019, subject to the approval of both Univar and Nexeo shareholders, as well as receipt of regulatory approvals and satisfaction of other customary conditions. Nexeo's key stockholders, TPG and First Pacific, have agreed to provide consent for the proposed transaction.
Univar intends to finance the cash portion of the transaction and refinance Nexeo's existing debt with a combination of available cash and bank financing, for which it has received commitments.