(Sept. 18) – The Woodlands-based chemicals and plastics distributor Nexeo Solutions announced Monday it had agreed to be purchased by Univar of Illinois for $2 billion, including debt.
TPG-backed Nexeo was purchased for $1.58 billion in 2016 by blank-check company WL Ross Holding Corp. – run by now-U.S. Commerce Secretary Wilbur Ross Jr. TPG is still a shareholder.
Nexeo chief legal officer Michael Farnell Jr., who also serves as chief administrative officer and secretary, hired his previous law firm Weil, Gotshal & Manges as the company’s outside legal advisor.
Wachtell, Lipton, Rosen & Katz counseled Univar, which used Goldman Sachs as its financial advisor. Moelis & Co. was Nexeo’s financial advisor.
Vinson & Elkins said it advised TPG. Houston partners Lande Spottswood and Sarah Morgan led the team with assistance from associate Jessica Lewis. Houston partner Lina Dimachkieh advised on tax matters.
Before joining Nexeo, Farnell was legal counsel for TPG between 2006 and 2011 and a corporate attorney at Weil in Dallas between 1998 and 2006. He received his law degree from SMU.
Between 2006 and 2013, Farnell also served as a board member at TPG-backed Vita Group, a U.K. foam rubber maker. The company was sold earlier this year to investor Strategic Value Partners for an undisclosed sum.
The consideration includes 0.305 of a share of Univar stock for each Nexeo stock and $3.29 per share in cash. The cash portion could be reduced by up to 41 cents per share based on Univar’s stock trading before the transaction closes.
Univar’s president and CEO David Jukes said in a statement that the combination will create the top global chemical and ingredients distributor with the largest North American sales force, the broadest product offering and most efficient supply chain network in its sector.
Nexeo CEO David Bradley said the purchase represents a logical and compelling step forward for the company and is consistent with its focus on accelerating growth for the benefit of its customers, employees and suppliers.
Univar expects the deal to add to earnings and cash flow in the first full year of ownership and lead to $100 million in annual cost savings by the third year and a reduction of annual capital expenditures by $15 million per year.
Univar said it’s hired an external advisor to evaluate strategic alternatives for Nexeo’s plastics business, which may lead to a sale. The unit distributes thermoplastic resins and other products supporting original equipment manufacturers, molders and design firms globally and represents less than 10 percent of the combination’s earnings.
The transaction has to clear regulators and both sets of shareholders but should close in the first half of next year. Nexeo stockholders TPG and First Pacific have agreed to provide consent for the transaction.
Univar intends to finance the cash portion of the deal and refinance Nexeo’s debt with available cash and bank financing it’s already lined up.