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Contact:
Jodi Allen (Investor Relations)
(973) 357-3283
Cytec to Acquire
Advanced Composite Materials Company Umeco plc
Accelerates Cytec’s Focus on High Performance Growth Segments
Enhances Existing Industrial Market Presence in Advanced
Composites and Provides Large Application Development Group
Transaction Immediately Accretive to Cytec’s Earnings Per Share
Cytec to Exceed Q1 Consensus Earnings Estimates
Woodland Park, N.J.
– April 12, 2012 – Cytec Industries Inc. (NYSE: CYT) today
announced its firm intention to acquire all of the outstanding
shares of Umeco plc (‘Umeco’) (LSE: UMC.L), an international
provider of advanced composite materials, in an all-cash
transaction valued at approximately $439 million (£274.3 million
based on a 1.60 exchange rate). The board of directors of Umeco
intends to unanimously recommend the transaction to Umeco
shareholders. The acquisition of Umeco will allow Cytec to
further enhance and leverage its position as a technology leader
in advanced composite materials. The transaction will expand
Cytec’s presence in both aerospace and industrial applications,
an area where Cytec sees excellent opportunities for growth and
value creation.
“We are excited about combining Umeco with Cytec’s existing
advanced composites businesses. It greatly improves our
composite presence in the industrial sector, where we see
tremendous potential for significant value creation in
applications like automotive as customers seek to reduce weight
and CO2 emissions. In addition, the acquisition also enhances
our near-term composite capacity while we complete capital
investments over the next few years,” said Shane Fleming,
Chairman, President and Chief Executive Officer. “This
transaction is consistent with our strategy to focus on
profitable and growing segments where we can leverage our
technological leadership. The acquisition of Umeco will provide
us with additional scale, a dedicated supply chain well-tailored
to the needs of the high performance industrial sector and
application development capabilities that will help us respond
quickly and effectively to customers’ needs.”
Founded in 1917, Umeco plc is an international provider of
advanced composite materials, primarily to the aerospace and
defense industries, and industrial sectors such as automotive.
Serving high growth, global end markets, Umeco’s Structural
Materials business focuses on the development, manufacture and
supply of advanced composite materials, and its Process
Materials business focuses on the development, manufacture and
supply of processing materials for the composites industry.
Umeco is headquartered in the U.K. and reported revenues of £207
million ($332 million assuming a 1.60 exchange ratio) in its
most recent financial year ended 31 March 2011.
The transaction is expected to be immediately accretive to
Cytec’s earnings per share. It will extend Cytec’s portfolio of
products, add new revenue streams, and enhance production
capacity that will enable the combined company to leverage its
strong customer relationships and partner network to expand
distribution worldwide. Year one targeted synergies are in raw
material costs, administrative areas and increasing aerospace
revenue from added capacity which are approximately $15 million
with additional synergies anticipated over time as we move
through the integration process. The estimated EPS accretion for
the remainder of 2012 is approximately $0.20 per share and full
year 2013 is estimated at approximately $0.65 per share
including synergies.
Mr. Fleming continued, “This transaction is an important step
forward as we position Cytec with an industry-leading portfolio
of growth businesses within our Engineered Materials and In
Process Separation growth platforms. We will continue to build
on our recent success in capturing new business and penetrating
the market with our advanced technology solutions as we seek to
deliver enhanced value to our stakeholders.”
Financing
Cytec expects to finance the acquisition using cash balances on
hand, including $210 million recently drawn down under its $400
million credit revolver facility, with the objective of
maintaining an investment grade profile.
Organization and Management
Upon completion of the transaction, Cytec will organize
the combined assets in two separate reporting segments. Umeco’s
advanced materials business will be integrated into a newly
created High Performance Industrial Materials (“HPIM”) segment
that will focus on non-aerospace growth markets. Cytec’s
Engineered Materials (“CEM”) segment will continue to focus on
aerospace growth opportunities. Cytec does not anticipate
significant workforce reductions resulting from this
transaction, which is intended to accelerate growth in
Industrial markets and thereby create additional opportunities
for profitable growth.
Terms and Approvals
Both companies’ boards of directors have unanimously approved
the transaction, full details of which are contained in an
announcement made today in the United Kingdom under Rule 2.7 of
the U.K. Takeover Code. Each Umeco director intends to vote in
favor of the transaction, as each Umeco director who holds Umeco
share has irrevocably undertaken to Cytec in relation to Umeco
shares in which he holds an interest. Cytec has also received
irrevocable commitments from three shareholders to vote
approximately 30% of Umeco’s outstanding shares in favor of the
transaction. These irrevocable commitments are subject to
certain conditions, further details of which are described in
the Rule 2.7 announcement. The transaction is expected to close
in the third quarter of 2012.
The transaction will be structured as a “scheme of arrangement”
under English law, and is subject to the approval of Umeco
shareholders as well as other customary closing conditions,
including approvals from relevant regulatory authorities and the
U.K. High Court. The acquisition will be subject to the terms
and conditions set out in the announcement made today in the
U.K., and subject to such further terms as will be set out in
the scheme of arrangement document to be delivered to Umeco
shareholders. To become effective, the scheme of arrangement
requires, among other things, the approval of a majority in
number of Umeco shareholders, present and voting either in
person or by proxy, representing 75% or more in value of the
Umeco shares held by all holders. The acquisition is also
subject to customary regulatory approvals. Upon the scheme of
arrangement becoming effective, it will be binding on all Umeco
shareholders.
Barclays is acting as financial advisor to Cytec and Squire
Sanders is acting as its legal advisor.
First Quarter Financial Update
Separately, Cytec also announced today that it estimates its
adjusted earnings per share for the first quarter of 2012 to be
between 45% and 50% above the current consensus analyst estimate
of $0.85 per share. The key drivers for the quarter are the
continued growth in the Engineered Materials and In Process
Separation segments and better than expected start to the year
in Coating Resins. Cytec will provide full details of the first
quarter results including updated 2012 guidance in its first
quarter earnings conference call scheduled for April 20, 2012 at
11:00am ET. Details for this call were provided in a separate
release issued on March 29.
Investor Conference Call to be held on April 12 at 8:30
a.m. ET
Cytec will host a live conference call today, April 12 at 8:30
a.m. ET to discuss the Umeco transaction. Interested parties may
listen to the conference call by dialing (888) 894-3692
(U.S. & Canada) or (706) 902-4297 (International) and using
access code 70797108.
A live webcast of the conference call may be accessed through
the Investor Relations section on Cytec’s web site at
www.cytec.com.
A presentation will be made available shortly before the call
via Cytec’s Investor Relations website. A replay of the webcast
will be available for 3 weeks via Cytec’s investor relations
website.
About Cytec
Cytec’s vision is to deliver specialty chemicals and materials
technologies beyond our customers’ imagination. Our focus on
innovation, advanced technology and application expertise
enables us to develop, manufacture and sell products that change
the way our customers do business. These pioneering products
perform specific and important functions for our customers,
enabling them to offer innovative solutions to the industries
that they serve. Our products serve a diverse range of end
markets including aerospace composites, structural adhesives,
automotive and industrial coatings, electronics, inks, mining
and plastics.
About Umeco
Umeco is an international provider of advanced composite
materials primarily to the aerospace & defense, wind energy,
recreation and automotive industries.
Umeco is managed through two continuing business streams:
-
Structural
Materials – development, manufacture and supply of advanced
composite materials; and
-
Process
Materials – development, manufacture and supply of vacuum
bagging materials.
Use of
Non-GAAP Measures
Management believes that adjusted earnings per share, which are
non-GAAP measurements, are meaningful to investors because they
provide a view of the Company with respect to ongoing operating
results. Such non-GAAP measurement is not recognized in
accordance with generally accepted accounting principles (GAAP)
and should not be viewed as an alternative to GAAP measures of
performance.
Forward-Looking Statements
Except for the historical information and discussions contained
herein, statements contained in this release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Achieving the results
described in these statements involves a number of risks,
uncertainties and other factors that could cause actual results
to differ materially, as discussed in Cytec’s filings with the
Securities and Exchange Commission.
Barclays, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting
exclusively for Cytec and Cytec UK Holdings Limited and no one
else in connection with the transaction and other matters
referred to in this announcement and the scheme document and
will not be responsible to any person other than Cytec and Cytec
UK Holdings Limited for providing the protections afforded to
clients of Barclays nor for giving advice in relation to the
transaction or any other matter or arrangement referred to in
this announcement.
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