American chemical company DuPont de Nemours Inc. reportedly signed a definitive agreement to buy out Spectrum Plastics Group from AEA Investors, a U.S. based private equity firm. The acquisition will reinforce DuPont’s position in booming non-cyclical healthcare sector.

As per the sources, the deal will cost DuPont a total of USD 1.75 billion with customary transaction adjustments, which represents a 15.6x multiple on EBITDA forecast 2023 based on the net purchase price, 13.2x including expected cost synergies of USD 20 million. The firm estimates that the deal will add to the collective EPS at once and enable a high single-digit ROIC in half a decade.

Ed Breen, CEO of DuPont, was quoted saying that the firm was focused on Spectrum for a long time and the team is excited about the deal. He added that Spectrum is a potent strategic complement to the company’s existing healthcare portfolio, including businesses with strong growth & profitability, deep customer relationships, and best-in-class innovations. The combined entity will possess additional research & manufacturing capabilities with broader & more integrated solution set.

One of AEA Investors’ partner, Rahul Goyal reportedly said that Spectrum has improved its manufacturing capabilities & offerings in medical end markets and achieved significant growth & increased profitability through investments in the commercial & engineering organizations. Goyal added that the firm was pleased to have supported Spectrum’s transformation, and believed that DuPont-Spectrum combination is ideally positioned to carry on offerings of highly-engineered healthcare application solutions and excellent customer service.

To ensure smooth proceedings, DuPont hired Skadden, Arps, Slate, Meagher & Flom LLP as its legal advisor. While Spectrum Plastics Group and AEA Investors appointed Fried, Frank, Harris, Shriver & Jacobson LLP as their legal advisor as well as Piper Sandler Companies as their financial advisor.

It is speculated that DuPont will pay the purchase price using existing cash balances. Depending upon the regulatory approvals and other accepted conditions, the Spectrum Plastics acquisition will close by Q3 end in 2023.

Source Credit: https://www.prnewswire.com/news-releases/dupont-to-acquire-spectrum-plastics-group-from-aea-investors-301812510.html