Kraton Performance Polymers To Acquire Arizona Chemical - Quick Facts

(RTTNews) - Kraton Performance Polymers, Inc. (KRA) announced a definitive agreement to acquire all of the capital stock of privately held Arizona Chemical Holdings Corporation for a cash purchase price of $1.37 billion. The seller is AZC Holding Company, LLC, which is principally owned by investment funds managed by American Securities LLC.

Arizona Chemical is a leading global producer of high-value performance products and specialty chemicals derived from non-hydrocarbon, renewable raw materials.

Kevin Fogarty, Kraton's CEO, said, "Our stockholders will benefit from identified pre-tax synergies of $65 million, which we expect to achieve by 2018. On a combined basis we expect to generate free cash-flow of more than $450 million over the first three years of combined operations, which will be available for debt reduction and allocation to stockholders."

Kraton will finance the purchase price through debt facilities that have been committed by Credit Suisse Securities (USA) LLC, Nomura Securities International, Inc., and Deutsche Bank Securities, Inc.

"Following the acquisition, Kraton's long-term debt is expected to be approximately $1.78 billion including approximately $1.35 billion of covenant-lite term loans, with the balance comprised of senior unsecured notes. We will retain adequate liquidity through a $250 million asset-based revolving credit facility which we expect to be largely undrawn," said Stephen Tremblay, Kraton's CFO.