Synthomer Plc · LSE:SYNT
Synthomer — Merger or Acquisition (October 2021)
26 slides from Synthomer's merger presentation, Oct 28, 2021
Slide 1: Acquisition of Eastman's Adhesive Resins business
ADHESIVE TECHNOLOGIES Acquisition of Eastman’s Adhesive Resins business to form the new Adhesive Technologies Division of Synthomer October 2021 Adhesive Technologies Investor Presentation | 1 An exciting new platform for growth
Slide 2: Disclaimer
Disclaimer This document, which has been prepared by Synthomer PLC (the "Company"), is produced in connection with the proposed acquisition of Adhesive Technologies and an associated proposed placing (the "Placing") of new ordinary shares in the Company (the "Placing Shares") and the proposed admiss
Slide 3: Adhesive Technologies: An exciting new platform for growth
Adhesive Technologies: An exciting new platform for growth 1 Well-invested assets with a global leading position in adhesives 2 Six plants with strong SHE(1) standards and manufacturing excellence heritage 3 Increased exposure to attractive end-markets with resilient and GDP+ growth fundamentals 4 G
Slide 4: Transaction summary
Transaction summary Adhesive Technologies $595.7m Revenue(1) June 2021 LTM Financials $97.3m Adjusted EBITDA(1) Adhesive Technologies valued at $1bn (approx. £728m(2)) on a cash / debt free basis Represents Enterprise Value multiple of 10.3x Adhesive Technologies’ June 2021 LTM Adjusted EBIT
Slide 5: Table of contents
Table of contents • Adhesive Technologies Snapshot 06 • Transaction Rationale 07 • Financial Summary 16 • Transaction Timetable 21 • Appendix 24 Jefferson site (PA, USA) Investor Presentation | 5
Slide 6: Adhesive Technologies snapshot
Adhesive Technologies snapshot • Adhesive Technologies’ June 2021 LTM Revenue of $595.7m(1) and June 2021 LTM Adjusted EBITDA of $97.3m(1) Business Line Overview by Technology • Develops, manufactures and sells tackifying resins and additives for adhesive products Hydrocarbon Non-Hydrocarbon Resins
Slide 7: Transaction Rationale
Middelburg Site (Netherlands) Middelburg Site (Netherlands) Transaction Rationale Adhesive Technologies Investor Presentation | 7 An exciting new platform for growth
Slide 8: Well-invested assets with a global leading position in adhesives
Well-invested assets with a global leading position in adhesives A Global Leader in Hydrocarbon Step Change in Adhesives Product Global Brand with Strong Customer Adhesive Resins Offering Base 2020A Capacity (kt) Split by Producer(1) 2020A Revenue Split by Product Top 4 12% Adhesive ~10% Customers T
Slide 9: Six plants with strong SHE standards and manufacturing excellence heritage
Six plants with strong SHE standards and manufacturing excellence heritage Six Plants Providing a Global Footprint Adhesive Technologies’ Three Largest Facilities Middelburg, Jefferson, Longview, Franklin, VA Netherlands Pennsylvania Texas Jefferson, PA Middelburg, Netherlands Longview, TX Uruapan,
Slide 10: Increased exposure to attractive end-markets with GDP+ growth
Increased exposure to attractive end-markets with resilient and GDP+ growth fundamentals Core End-Markets Revenue by End-Market(2) 20% 20% Medium Term Growth Adhesive Technologies Targeted Sectors Tapes & Performance 13% 18% Packaging Hygiene Building & Labels Construction Additives for Tyres 11% 18
Slide 11: Greater scale and diversity to Synthomer's portfolio
Greater scale and diversity to Synthomer’s portfolio … Synthomer + Adhesive Technologies Synthomer + Adhesive Technologies Key Activities Combined Analysis Common End-Markets in Bold Synthomer Standalone June 2021 LTM Revenue Split(4) Speciality Coatings Functional Solutions Construction Acrylat
Slide 12: Further extending the Company's geographic footprint
… further extending the Company’s geographic footprint Adhesive Technologies: 2020A Revenue by Geography 4 Revenues by distribution Synthomer(1) 17% N. America 28% £1.6bn EMEA 56% Asia & RoW Adhesive Adhesive Synthomer: Synthomer EMEA EMEA: Technologies: Technologies 20 20 21 1 1 Adhesive Technologi
Slide 13: Strong R&D track record driving innovation-led growth
Strong R&D track record driving opportunities for further innovation-led growth Regalite UltrapureTM ImperaTM AerafinTM H2HCR Tyre Resins APO • Range of low odour, low trace chemical • High performance rubber formulations • Targets low tackifier / tackifier-free products for hygiene and packaging de
Slide 14: Alignment with our sustainability roadmap
Alignment with our sustainability roadmap - large and growing portfolio of sustainable products APO and H2HCR are key Hot melt adhesives technology products contributing towards Pine-based and tall oil rosins is a leading, sustainable Complementary low Scope 1 circular economy. They assist offer a b
Slide 15: Logical and strategic acquisition with attractive synergy potential
Logical and strategic acquisition with attractive synergy potential Experience in Integration Operational Performance Improvement c.$10m (Approx. 45% of synergies) • Synthomer has built a “tool box” and experienced team in integration Manufacturing excellence Procurement • $23m (approx. £16.9m(1
Slide 16: Compelling Financial Metrics and Conservatively Financed
Middelburg Site (Netherlands) Middelburg Site (Netherlands) Compelling Financial Metrics and Conservatively Financed Adhesive Technologies Investor Presentation | 16 An exciting new platform for growth
Slide 17: Transaction underpinned by compelling financial metrics
Transaction underpinned by compelling financial metrics - Target of $23m (approx. £16.9m(1)) annual run-rate pre-tax cost synergies(2) (c.4% of Adhesive Technologies’ revenue via cost take-outs) Synergies - Expected one-off implementation costs of $17m (approx. £12.6m(1)) - Attractive June 2021 LTM
Slide 18: EBITDA performance & outlook
EBITDA performance & outlook Adhesive Technologies Adjusted EBITDA Performance + Synergies ($m) Exxon Singapore COVID Recovery Synergy Delivery Capacity & COVID Impact • Expected market recovery due to 129 improved asset 121 utilisation • Attractive and well- 23 defined innovation 97 pipeline • Expe
Slide 19: Conservatively financed using equity and debt
Conservatively financed using equity and debt Up to 10% Equity Placing Expected net proceeds of £200m(1) (approx. $275m(2)) New shares to be placed with existing and new $275m Conservative approach to leverage remains shareholders unchanged KLK committing to subscribe for 9,067,728 (21.3%) new
Slide 20: New Synthomer Group
New Synthomer Group Combined June 2021 LTM Revenue Split Combined Synthomer(1) + Adhesive Technologies Acrylate Monomers • Revenue LTM June 2021: £2,574m Industrial 3% • No. of Sites: 43 Specialities • People: c.5,251(2) Performance 13% Elastomers 36% Adhesive 17% £2.6bn Technologies(3) 31% Function
Slide 21: Transaction Timetable
Middelburg Site (Netherlands) Middelburg Site (Netherlands) Transaction Timetable Adhesive Technologies Investor Presentation | 21 An exciting new platform for growth
Slide 22: Transaction timetable
Transaction timetable Expected Timetable and Equity Placing Summary Announcement of the Transaction and Equity Placing 28 October 2021 Results of Equity Placing announced 28 October 2021 Admission and settlement on the London Stock Exchange 1 November 2021 Circular published(1) November 2021 General
Slide 23: Adhesive Technologies: An exciting new platform for growth
Adhesive Technologies: An exciting new platform for growth 1 Well-invested assets with a global leading position in adhesives 2 Six plants with strong SHE(1) standards and manufacturing excellence heritage 3 Increased exposure to attractive end-markets with resilient and GDP+ growth fundamentals 4 G
Slide 24: Appendix
Middelburg Site (Netherlands) Middelburg Site (Netherlands) Appendix Adhesive Technologies Investor Presentation | 24 An exciting new platform for growth
Slide 25: Current trading
Current trading • Since Synthomer’s reported Interim Results on 5th August 2021, underlying demand has remained strong and in line with management expectations • The Movement Control Order in Malaysia was implemented to restrict the impact of COVID-19, leading to reduced customer utilisation and dem
Slide 26: Glossary
Glossary Term Description Slide Reference Adhesive Based on audited US GAAP FY2020 financial statements of the entities forming Adhesive Technologies, as adjusted Technologies' 8, 12 for Synthomer's accounting policies. Excludes Chinese JV revenues. Source: Company information FY2020 Revenue Adhesiv