PolyOne Corporation, a leading global provider of specialized polymer materials, services and solutions, today announced it has entered into a definitive agreement to sell its Performance Products and Solutions (PP&S) business to SK Capital Partners for $775 million in cash. PolyOne expects to record a pre-tax gain of approximately $600 million at the time the sale is completed.
With sales of approximately $700 million, PP&S is a global provider of formulated PVC and polypropylene based solutions, as well as contract manufacturing services, primarily serving the North American Construction and Automotive end markets.
"We conducted what became a very competitive bidding process for our PP&S segment," said
Robert M. Patterson, Chairman, President and CEO, PolyOne Corporation. "Ultimately, we determined that divesting the business to SK Capital Partners would provide greater flexibility to accelerate our specialty growth strategy and is in the best interest of customers, employees and shareholders."
"In the short term, proceeds from the sale will be used to pay down debt on our revolving line of credit and reduce our overall net debt to EBITDA leverage from 3.2 to 2.0 by year-end," said Mr. Patterson. "Longer term, we can further refine our focus on investing in and growing our three remaining segments: Specialty Engineered Materials; Color, Additives, and Inks; and Distribution."
The company noted it expects full year 2019 adjusted earnings per share from continuing operations to expand 6-8% over the prior year.
"We continue to benefit from recent investments made in composites and other sustainable solutions which is helping us to deliver adjusted EPS growth in an otherwise challenging environment," said Mr. Patterson. "As discussed on our second quarter conference call, margins are expanding as a result of improved mix, pricing and cost reductions."
In accordance with US GAAP, the company expects the PP&S business will be classified as "held for sale" and reported as a discontinued operation. Attachment A provides an estimate of adjusted earnings per share split between continuing and discontinued operations for recent historic periods. These estimates are subject to change as the company finalizes the accounting related to the discontinued operations, including the tax implications of the anticipated sale.
The company noted that HSBC served as financial advisor and led the sale process for PolyOne. Jones Day served as outside legal counsel. The sale is subject to satisfaction of regulatory requirements and other customary closing conditions, which the company expects to be completed during the fourth quarter. The company will discuss additional details of the transaction on its third quarter 2019 conference call.
