Platform Specialty Products in advanced talks to sell agricultural unit to Wilmcote
Jun. 11, 2018
Wilmcote confirmed the talks last Thursday morning following an earlier Wall Street Journal report of the possible transaction that could be announced this month, according to people familiar with the matter.
In a statement, Wilmcote didn’t disclose the expected sale price. It said discussions are ongoing, but cautioned that a deal isn’t certain. In a separate release, Platform said it has had held talks with Wilmcote as well as other parties, but didn’t provide specifics on the discussions.
If it proceeds, the sale would offer Platform a path to completing its already-stated plan of turning its two divisions into distinct companies, each with a more focused strategy and improved balance sheet, as it aims to boost an underperforming stock. Platform’s shares have lost more than half their value in the past few years, hurt by weakness in the agricultural segment and by concerns over the company’s ability to manage a heavy debt load.
Platform had about $5.5 billion of debt at the end of March. Including debt, a deal with Wilmcote could be valued at roughly $4 billion, the people said, meaning that it could help Platform shed a significant amount of its borrowings.
Martin E. Franklin and Nicolas Berggruen founded what is now Platform Specialty as a shell company and took it public on the London Stock Exchange in 2013. The company’s backers include William Ackman’s Pershing Square Capital Management, which has a 14% stake.
Platform’s two businesses—Agricultural Solutions and Performance Solutions—are of similar size, each generating annual sales close to $2 billion. The agrochemicals business, as it is known, develops crop-protection products. It had net sales of $1.9 billion last year, up 4%. The performance-solutions business, which provides specialty chemicals to the consumer-electronics, automotive and energy sectors, had net sales of $1.9 billion, up 6%.
Listed on the London Stock Exchange’s AIM stock market, Wilmcote is another so-called blank-check company—a vehicle that raises money publicly and then makes acquisitions—that has been focused on buying a chemicals concern it can use as a launchpad for more consolidation.
The chemicals sector has already been a hive of deal activity as companies shed noncore businesses or seek acquisitions that will boost revenue and profit and hand them new geographies and products. In March, Amsterdam-based Akzo Nobel NV struck a €10.1 billion ($11.8 billion) deal to sell its specialty-chemicals business to buyout firm Carlyle Group LP. Also this year, LyondellBasell Industries NV, a Rotterdam-based plastics and refining company, agreed to buy A. Schulman Inc., an Ohio supplier of plastic compounds.
Mr. Franklin, who has a history of building companies through acquisitions, had set out to replicate at Platform what he had created at consumer-products company Jarden Corp. He built Jarden into a portfolio including skis, playing cards and coffee machines before selling it to what is now known as Newell Brands Inc. for about $13 billion in 2016.
But Platform, of West Palm Beach, Fla., has struggled over the past few years under debt that now exceeds the company’s $3.5 billion market value. The debt largely comes from a roughly $3 billion deal to buy Arysta LifeScience in 2015.