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Nuplex Acquisition Springboard To Decade Of Growth

23 November, 2004

Nuplex Acquisition Springboard To Decade Of Growth

Nuplex Industries Limited is to proceed with the purchase of the coatings resins business of Akzo Nobel at a cost of $202 million ( 110 million euros ).

At today’s special meeting of Nuplex held in Auckland, shareholders approved the purchase of the European based manufacturer and distributor which has operations in eight countries, and the funding arrangements necessary to complete the acquisition.

The Chairman, Mr Fred Holland, encouraged shareholders to take up their entitlement in Nuplex’s $15 million share option plan, which would see existing shareholders being able to purchase shares at a discount to the market price.

He said the fund raising plan, which has the approval of the Securities Commission and is permitted under NZX and ASX rules, was a cost effective way of raising capital and had to directors’ knowledge never before been used in New Zealand.

Managing Director, John Hirst, told shareholders before the vote that the acquisition would increase earnings per share in its first full year by more than 10%. [ 45.9 cents in the financial year ending 30 June 2004] and give the company the ability to pay higher dividends.

The 10% earnings per share gain was after allowing for shares on issue to have increased by 20% and the cost of the additional borrowings to fund the purchase.

“Earnings before interest, tax, depreciation and amortisation ( EBITDA ) in the first full year of ownership will add more than 40% to the current business,” said Mr Hirst.

“Sales revenue will increase by 70% and we will have revitalised our technology base.

“The acquisition will provide mass for efficiency and buying leverage, secure our competitive technology position for the future and enable us to participate in further global opportunities.

“It will provide us with the springboard for growth for the next decade.”

He said that post acquisition, the company’s largest market would be Europe, although the combined Asia /Pacific region would be larger.

Nuplex and the Akzo Nobel coating division had specific strengths in different key products and application technologies, and he said they would be able to produce each other’s products without significant engineering modifications and investments.

“The potential net gain for both companies in their traditional markets is substantial.”

Mr Hirst also said that Nuplex anticipated there would be further consolidation of the international resin manufacturing market.

He said that now the name Nuplex was much better known internationally, he anticipated Nuplex would have the opportunity to participate in those developments and maintain its strategy of “acquiring existing operations where it made sound business and economic sense”.

Mr Hirst said that legal, tax, and service contract issues were likely to be resolved by the end of December, with the combined business commencing in January 2005.


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