CLEVELAND, July 5, 2011 /PRNewswire/ -- OM Group, Inc. (NYSE: OMG) today announced that it has signed a definitive agreement to purchase Vacuumschmelze GmbH & Co. KG (VAC) of Hanau, Germany, a global market leader in advanced materials and specialty magnetics, for approximately euro 700 million, including $50 million in common stock equity.
Founded in 1923, VAC is widely regarded as one of the premier designers, producers and marketers of the world's most technologically advanced materials and technologies, cores and components, and permanent magnets for electronic equipment markets, including the alternative energy, automotive, electric vehicles, electrical installation, and energy conversion and distribution segments. Among other things, the company has number-one global market positions in its Materials & Parts and Cores & Components units, and a leading global position in its Permanent Magnets unit.
"The proposed acquisition of VAC will allow us to accomplish several critical, strategic imperatives simultaneously," said Joseph Scaminace, OM Group's chairman and chief executive officer. "First and foremost, it will allow us to add another financially strong, market-leading business to our portfolio of highly specialized chemicals and metal-based materials, while preserving our capital structure. Second, it will dramatically accelerate our efforts to move closer to end users in stable and fast-growing end markets, particularly alternative energy, where we have been building a meaningful market position in photovoltaic materials and chemicals as a result of new product development and grid management and storage technologies through our acquisition of EaglePicher Technologies.
"The addition of VAC will also immediately create the size and scale necessary to further mitigate our exposure to raw material pricing volatility and would bolster our R&D capabilities, as VAC brings with it a broad intellectual property portfolio of more than 750 patents and a robust pipeline of innovative new products and technologies," said Scaminace.
VAC has world-class production facilities in Germany, Slovakia, Finland, China and Malaysia, with sales offices in 16 countries worldwide. The company employs 4,500 people globally – including 160 scientists and engineers. According to Scaminace, "VAC is well positioned – from both a geographic and market position standpoint – to benefit from mega-trends related to alternative energy, including power inverters for solar applications, magnetic assemblies for direct-drive generators in wind turbines, and materials and solutions for powering electric vehicles." VAC's current management team will remain in place following the close of the transaction.
In the 12-month period ending March 31, 2011, VAC recorded revenues of approximately euro 389 million and operating profit of euro 54 million, on an IFRS basis. Excluding one-time items related to the acquisition, OM Group expects the acquisition to be accretive to earnings in fiscal 2011. "From a financial perspective, this is a highly attractive opportunity for us, as, among other things, it will allow us to effectively invest our cash located in Europe in a business that is already delivering mid-teen operating margins and offers us double-digit growth potential under OM Group's strategic ownership, while delivering greater shareholder value through more sustainable and less volatile financial results," said Scaminace. OMG plans to report VAC's operating results in a newly created segment upon completion of the deal.
The proposed transaction is expected to close by the end of the third quarter of 2011 and is subject to satisfaction of customary closing conditions and regulatory approvals. The purchase price will be subject to usual post-closing adjustments to net working capital and other provisions for potential liabilities as defined in the purchase agreement. The transactions will be funded through a combination of cash on hand, stock and committed financing from BofA Merrill Lynch, PNC Capital Markets, and BNP Paribas, subject to customary terms and conditions.
OM Group has scheduled a conference call and live audio broadcast on the Web for 10 a.m. Eastern time today. Investors may access the live audio broadcast by logging on to http://investor.omgi.com. Alternatively, investors and analysts inside the U.S. or Canada may access the conference call by phone at 800-344-0734 during the event or at 800-642-1687 to listen to the replay. Callers outside the U.S. or Canada may dial 973-935-2082 during the event or 706-645-9291 to listen to the replay. The conference code is 80891262. A copy of management's presentation materials will be available on OMG's website at the time of the call. The company recommends visiting the website at least 15 minutes prior to the webcast to download and install any necessary software. A webcast audio replay will be available on the "Investor Relations - Presentations" page of the company's website three hours after the call.
VACUUMSCHMELZE GmbH & Co. KG (VAC), based in Hanau, Germany, designs, produces and markets advanced materials, primarily magnetic but also with other physical properties, and related products. VAC Group has annual sales in 2010 of approximately euro 350 million. Its more than 750 registered patents place it among the world's most highly innovative developers of advanced industrial materials. VAC was acquired by One Equity Partners in 2005. For more information, visit www.vacuumschmelze.com.
ABOUT ONE EQUITY PARTNERS
One Equity Partners is the private investment arm of JPMorgan Chase & Co. and manages over $8 billion in commitments and investments solely for the bank. OEP enters into long term partnerships with companies to create sustainable value through long term growth driven both organically and inorganically. Founded in 2001, OEP has 39 investment professionals in New York, Chicago, Frankfurt, Hong Kong and elsewhere around the globe. Visit www.oneequity.com for more information.
ABOUT OM GROUP, INC.
OM Group, Inc., with fiscal 2010 net sales of approximately $1.2 billion, is a leading global solutions provider of specialty chemicals, advanced materials, electrochemical energy storage and unique technologies crucial to enabling our customers to meet increasingly stringent market and application requirements. The company serves a wide variety of sectors, including rechargeable batteries, electronic devices, cutting tools, petrochemical catalysts, electronics manufacturing, industrial coatings, defense, aerospace, and medical devices. Headquartered in Cleveland, Ohio, OM Group operates manufacturing facilities in the Americas, Europe, Asia and Africa. For more information, visit the company's website at http://www.omgi.com.
The foregoing discussion may include forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon specific assumptions and are subject to uncertainties and factors relating to the company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the company. These uncertainties and factors could cause actual results of the company to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. Such uncertainties and factors include: the recent natural disasters in Japan and disruptions to the business environment in that country; the operation of our critical business facilities without interruption; the effect of non-currency risks of investing and conducting operations in foreign countries, including political, social, economic and regulatory factors; the availability of competitively priced supplies of raw materials, particularly cobalt; the speed and sustainability of price changes in cobalt; the potential for lower of cost or market write-downs of the carrying value of inventory necessitated by decreases in the market price of cobalt or the selling prices of the Company's finished products; the direction and pace of our strategic transformation, including identification of and the ability to finance potential acquisitions; the potential impact that a deterioration in global economic and financial market conditions may have on our business and operations, including future goodwill impairments; the impact on pension accounting if actual results differ from actuarial assumptions; the effect of changes in domestic or international tax laws; the effect of fluctuations in currency exchange rates on the Company's international operations; the demand for metal-based specialty chemicals and products in the Company's markets; the impact of environmental regulations on our operating facilities and the impact of new or changes to current environmental, health and safety laws on our products and their use by our customers; and the general level of global economic activity and demand for the Company's products.
SOURCE OM Group, Inc.