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Nuplex enters agreement to buy German Viverso operations

NZX/ASX release 28 October 2011

Nuplex enters agreement to buy Bayer’s Viverso operations in Germany

Nuplex Industries today announced it has entered into a binding agreement to acquire Viverso GmbH (Viverso), its related operations and product groups from Bayer MaterialScience (BMS) for €75 million. Viverso manufactures resins used in coatings and putties from its world class, state-of-the-art facility located in Bitterfeld, Germany.

A strategic, bolt-on acquisition that will be earnings accretive in this financial year Nuplex CEO, Emery Severin said: “This is a very attractive opportunity for Nuplex and consistent with our strategy to establish leading market positions through value accretive, bolt-on acquisitions. Being a focused, independent resins business, Viverso’s complementary operations are a natural fit with our own European operations.

“The combination of Viverso with Nuplex’s European operations will deliver a number of benefits and will result in Nuplex becoming a top four resins manufacturer in the region.

“Viverso further strengthens a number of our leading market positions in Europe, particularly in the industrial coatings markets. It also expands our product range and include; Viverso’s environmentally friendly, solvent free, water resistant resins used in construction coatings; resins for putties used in vehicle refinish; and resins offering unique chemical resistance and high temperature performance. We see opportunities to leverage these new products across our global operations.

“We will also enter into a range of contracts from 2 to 10 years in length, to toll manufacture specialty, trademarked products for Bayer.

“Having an on-the-ground presence in Germany will give us greater access to the German industrial market. It will also provide us with closer proximity to the emerging Central and Eastern European economies, where Viverso has strong market positions.

“Through new and strengthened product capabilities, as well as a broader geographic footprint in Europe, Viverso provides a strong platform for future earnings growth.

“Commissioned in 1995, the site in Bitterfeld will increase Nuplex’s regional capacity by around 50% and has the capacity to assist in facilitating our planned growth opportunities.

Bitterfeld is considered one of the most efficient and flexible resins plants in Europe and is run by 165 experienced employees who will join Nuplex in the coming months,” Mr Severin said.

Positive impact on FY12 earnings guidance

Combining the expected positive earnings contribution from Viverso with the earnings generated by our existing operations, and the recently announced acquisition of Acquos’s Masterbatch operations, Nuplex expects to deliver approximately 10% year on year EBITDA growth in FY2012.

Transaction details

Under the agreement, Nuplex will pay €75 million for Viverso GmbH, its operations, working capital and additional products also manufactured at Bitterfeld. The price paid is equivalent to 6.5 times annual, pro-forma EBITDA.

In FY2012, Viverso is expected to be earnings per share accretive for Nuplex shareholders.

Earnings are expected to grow in coming years as synergies are realised.

The acquisition will be 100% debt funded. To facilitate the transaction, Nuplex has secured an additional facility of AUD100 million to increase its total debt facilities from AUD200 million to AUD300 million, and is exploring options to convert some of it into long term debt via the US private placement market.

Following completion, Nuplex’s net debt will be around NZD210 million. Nuplex’s gearing ratio as measured by the ratio of net debt to net debt plus equity will increase to 27% from 12% as it was at 30 June 2011, remaining within the levels the company considers appropriate for an industrial company such as Nuplex.

The transaction is subject to German regulatory approval, and is expected to be completed by the end of 2011.

Ends.

Nuplex__28_Oct__Viverso_presentation.pdf

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