Element Solutions Closes Kester Buyout, Reprices Term Loans
Zacks Investment Research | Dec 03, 2019 09:38PM ET
Element Solutions Inc (NYSE:ESI) announced that it completed the acquisition of Kester from Illinois Tool Works Inc (NYSE:ITW) for roughly $68 million in cash.
Per management, the Kester acquisition will add capabilities and scale to its existing electronics assembly materials business. The acquisition serves as a model for highly-strategic acquisitions that the company plans to undertake in addition to the judicious return of capital to shareholders in its capital allocation strategy.
Element Solutions will not witness any substantial increase in its net debt to adjusted EBITDA ratio due to the purchase.
Further, the company announced the repricing of its existing $744-million term loan B, which is expected to reduce borrowing costs by 25 basis points or annual interest expenses by $2 million.
Notably, Element Solutions’ earlier-announced cross-currency swaps and interest rate swaps will still be applicable with the same terms and conditions. Thus, it will effectively set the term loan interest rate at roughly 2% on the Euro equivalent balance of the loans through January 2024. The term loans’ maturity of January 2026 remained unchanged.
The company expects the cumulative impact of the Kester acquisition and the repricing of existing term loans to contribute 3-4% accretion to its adjusted earnings per share (EPS) in 2020.
Shares of Element Solutions have lost 7.3% in the past year against its Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.