UK polymer company Synthomer plc says it has received conditional clearance from the European Commission regarding its proposed acquisition of Omnova Solutions Inc. Synthomer had made an offer to buy Omnova for an enterprise value of US$824 million in a bid to strengthen its global position last year.
Omnova is a US-based specialty chemical company which develops, manufactures and markets emulsion polymers, speciality chemicals and decorative products and provides engineered surfaces for various commercial, industrial and residential end uses.
Following its Phase 1 investigation, the European Commission concluded that the transaction, as modified by the commitments offered by Synthomer, does not raise any competition concerns. The commitments require divestment of Synthomer’s small VP Latex business in Germany. The VP Latex business represented less than 0.5% of
Synthomer’s 2018 sales volume. Whilst financially immaterial, the sale process must be finalised prior to the closing of Synthomer’s acquisition of Omnova. This represents a structural remedy offered by Synthomer to address any concerns regarding the overlap between the two companies’ VP Latex operations.
Synthomer has already received a number of expressions of interest for this business and will now proceed with the sale process, with completion of the acquisition of Omnova expected late Q1 2020. The transaction also remains subject to regulatory approval from the Turkish authorities, which is expected to be received early in February.
Calum MacLean, Chief Executive of Synthomer, commented:
“We are pleased to have received European Commission clearance for the acquisition of Omnova but note the structural remedy required to divest our small VP Latex business in Germany. The acquisition of Omnova is strategically and financially compelling. It will materially expand our international business into North America, and grow our presence in Europe and Asia, as well as provide an attractive financial profile with significant expected synergy benefits. We are now working on the divestment as quickly as possible, which will enable us to conclude the Omnova acquisition and focus on taking the combined business to the next level.”