WL Ross Holdings Corp. (Nasdaq: WLRH) has agreed to acquire a majority stake in Nexeo Solutions Holdings, LLC, a chemical and plastic distributor, from private equity firm TPG. WL Ross is a blank-check company formed by billionaire investor Wilbur Ross to make acquisitions. Ross is best known for investing in distressed companies. The deal values Nexeo at $1.6 billion. TPG is retaining a minority stake.
Nexeo, headquartered in The Woodlands, Texas, has operations worldwide. Its products are used in the chemicals manufacturing, oil and gas, paintings and coatings, automotive, healthcare and personal care solutions and distributed in North America, Europe, the Middle East and Africa (EMEA) and Asia. The company’s revenue for fiscal year 2015 totaled $3.9 billion.
“Over the last two years, we have evaluated a number of potential acquisitions for WLRH and we believe this opportunity offers a superior option for our shareholders,” says Wilbur Ross. “Nexeo Solutions presents a unique opportunity to invest in an industry-leading company supported by strong business fundamentals and long-term structural growth trends. Additionally, we believe the Company is an ideal platform to further roll up the fragmented chemicals and plastics distribution space, creating significant value for shareholders."
TPG acquired Nexeo from Covington, Kentucky-based specialty chemical solutions company Ashland Inc. in 2011 and is expected to retain a 35 percent stake in the new company. David Bradley, CEO of Nexeo, says the deal allows the company to align its ownerships structure in a way that jumpstarts its progress. Following completion of the merger, WL Ross will change its name to Nexeo Solutions and trade on the Nasdaq capital markets exchange under the tickers NXEO, NXEOU and NXEOW.
“With a strong, centralized operating platform and access to multiple sources of capital, I believe we will be positioned to grow organically and through acquisition,” Bradley says.
Jefferies LLC was the sole M&A adviser to Nexeo on the deal; Vinson & Elkins LLP acted as legal advisers to the company and TPG. Lazard acted as M&A Advisor for WL Ross, while Deutsche Bank Securities, Credit Suisse and Bank of America Merrill Lynch were equity capital markets advisers to WL Ross. Kirkland & Ellis and Skadden, Arps, Slate, Neagher & Flom LLP served as legal adviser to WL Ross.
There has been a flurry of deals in the chemicals space in recent months. In February, Polymers Solutions Group acquired plastics additives provider Flow Polymers LLC from Geneva Glen Capital. Also that month, Carlisle Cos. (NYSE:CSL) purchased Balgach, Switzerland-based MS Oberflächentechnik AG, which makes powder coating equipment and related parts for customers in Europe.