OM Group has signed a definitive agreement to buy German advanced materials and magnetics specialist Vacuumschmelze (VAC) for around €700 million. The purchase, which includes €35 million in common stock equity, will enable OM to take advantage of VAC’s economies of scale and consolidate relationships with its rapidly-expanding portfolio of customers in the solar industry.
With a workforce of 4,500, and manufacturing and sales offices throughout Europe and Asia, VAC is ideally positioned, from both a geographic and production standpoint, to take advantage of any trends in the renewable energy industry. Over the last 12 months the company has registered profit totalling €54 million, a figure that helped convince OM of its investment potential.
“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. “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.
“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.”
The proposed sale is expected to close by the end of Q3 and its completion and price is subject to satisfaction of customary closing conditions, regulatory approvals and post-closing adjustments. 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.