DuPont (NYSE: DD) announced that it has reached a definitive agreement with Advent International, one of the world's largest private equity firms, to acquire Laird Performance Materials for US$2.3 billion , The funds will be paid from the existing cash balance. The transaction is expected to be completed in the third quarter of 2021, subject to regulatory approval and meeting customary transaction conditions.
Laird High Performance Materials is the world's leading company in the field of high performance electromagnetic shielding and thermal management, providing comprehensive high-performance products and solutions to manage thermal energy and protect equipment from electromagnetic interference. The company has more than 4,300 employees worldwide, 11 manufacturing bases in North America, Europe and Asia, and revenue in 2020 will reach 465 million U.S. dollars. Laird High Performance Materials has always maintained a high single-digit growth rate, excellent gross profit margin and adjusted profit before interest, tax, depreciation and amortization (approximately 50% and 30%, respectively). With strong growth and outstanding financial status, Laird High Performance Materials is in line with DuPont's strategic goal, which is to direct its product portfolio to attractive markets with long-term growth trends and further differentiate its product portfolio.
DuPont Executive Chairman and CEO Ed Breen said: "The acquisition of Laird High Performance Materials is an important step in DuPont's strategy to become a global innovation leader and a sophisticated cross-industry company. Laird High Performance Materials and DuPont Electronics and Industrial Division’s business are strategically complementary. Our applied material science expertise and Laird’s high performance materials industry-leading application engineering capabilities will strengthen DuPont as a major electronic original equipment manufacturing The strength of important partners of manufacturers and other manufacturers. We look forward to the participation of Laird’s excellent team. I believe that with the further expansion of global layout, operations and technical capabilities, the combined electronics and industrial team will be eye-catching The synergy effect of revenue and promote DuPont to further accelerate to become a faster growth and higher profit company."
The transaction combines DuPont's technology portfolio in the fields of thin film, flexible board materials and electroplating chemistry with Laird's high-performance materials electromagnetic shielding and thermal management solutions. With its leading innovative technology and product portfolio, the combined business will become a leader in advanced electronic applications in fast-growing markets such as smart/electric vehicles, 5G, artificial intelligence, the Internet of Things, and high-performance computing. The strong capabilities in materials science and application engineering and the ever-expanding customer base are expected to significantly accelerate the time to market of customer products, create new efficiencies in the development of multi-functional solutions, and provide high-value next-generation products. These products will be Create more revenue synergies in the next few years. DuPont will participate in the value chain with its unique advantages to solve the increasingly complex challenges that leading original equipment manufacturers face in thermal management, signal integrity, miniaturization, power management and reliability.
Shonnel Malani, Managing Director of Anhong Capital, said: "Laird High Performance Materials is an outstanding company. After strategic adjustments and investments in the company's products and talents, the business has achieved strong growth. We believe that DuPont will become Laird An excellent partner for high-performance materials, the merged business unit will provide customers with more unique, comprehensive, comprehensive and innovative solutions."
By the end of 2024, DuPont expects to realize approximately US$60 million in pre-tax operating cost synergies, most of which will be realized in the first 18 months after the transaction is completed. The one-time cost of achieving these synergies is estimated to be approximately US$40 million. After adjusting for one-time costs and transaction-related amortization, DuPont expects that the transaction will increase its operating profit before interest, tax, depreciation and amortization (EBITDA), free cash flow, and adjusted per share within the first 12 months Earnings, and achieve a high single-digit return on capital (ROIC) in the fifth year. Under the premise of independent transactions, the enterprise value multiple is approximately 15 times the estimated EBITDA in 2021, and it is approximately 11 times including cost synergies.
"This transaction marks a new strategic step that we have taken, which is to further strengthen our focus and lead our investment to high-value and high-growth opportunities. We will continue to work on a balanced capital allocation policy for Shareholders bring huge returns, including organic growth, targeted mergers and acquisitions and shareholder compensation.” Pu Ruiting added.