Elementis (ELM) announced that it has reached an agreement in principle to acquire Mondo Minerals BV, a producer of industrial talc additives currently owned by US private equity group Advent International.
IC TIP:
Buy
at
253p
The deal, which gives Mondo an enterprise value of $600m (£457m) on a cash-free, debt-free basis, is to be financed through a $280m rights issue and new committed debt facilities of $775m, and represents an enterprise value/cash profits (EV/EBITDA) multiple of 17, which, according to analysts at JPMorgan, “appears high relative to a few peers of Mondo”. Elementis expects the enlarged group to have net debt equivalent to 2.75 times adjusted cash profits at the anticipated time of closing, during the third quarter of the year.
