Hillenbrand, Inc. (NYSE: HI) has reached a definitive agreement to sell its Cimcool business to DuBois Chemicals, Inc., which is headquartered in Cincinnati, Ohio, U.S.A. The sale follows Hillenbrand’s previously announced strategic review of alternatives for this business, which was part of the 2019 acquisition of Milacron Holdings Corp.
Hillenbrand’s wholly-owned subsidiary Milacron LLC entered into an equity and asset purchase agreement with DuBois, pursuant to which DuBois will acquire the Cimcool business at a purchase price of approximately USD224 million in cash, subject to certain customary closing adjustments. In addition, DuBois has agreed to pay up to USD26 million in contingent purchase price upon a future sale of the combined DuBois and Cimcool businesses, conditioned upon DuBois’ ultimate sponsor receiving elevated levels of return on equity, for an aggregate purchase price not to exceed USD250 million should these conditions be met.
“The divestiture of Cimcool aligns with our previously disclosed intent to seek strategic alternatives for the business and allows us to remain focused on the continued integration of the Milacron APPT and MDCS businesses with Hillenbrand,” said Joe Raver, president and CEO of Hillenbrand. “The proceeds from the sale will be used for de-leveraging activities, strengthening our financial position as we seek to enhance our leadership positions in the industrial platforms that represent our most compelling opportunities for profitable growth.”
Founded in 1920, DuBois is a premier provider of customized and value-added specialty chemicals solutions and services to more than 15,000 customers. DuBois researches, develops, manufactures, and supports a broad range of specialty chemical products and related equipment to provide solutions to customers’ most challenging performance, quality, cost, safety, and compliance issues for a variety of industries.
“We are excited that our customers will have access to a new set of solutions, applications experts, and technical service resources to support and add value to their businesses,” said Jeff Welsh, president and CEO of DuBois. “We believe that this acquisition will allow us to increase our presence among significant customers and important segments. The expanded product portfolio of the combined organization will also allow us to meet our customers’ evolving needs in new applications areas.”
Consistent with its current capital allocation priorities, Hillenbrand intends to use proceeds from the sale for de-leveraging activities.
The closing of the transaction is expected to occur on 30 March 2020, subject to customary closing conditions. Employee consultations required by law may result in a second closing for the Dutch portion of the business, and if required, Milacron has agreed to operate the Dutch business for the benefit of DuBois until that closing, as provided in relevant transaction documents.
Houlihan Lokey served as Hillenbrand’s financial advisor on the disposition.
Hillenbrand plans to update its financial guidance to reflect the transaction at the time of its next regular quarterly earnings call. Investors should not rely upon current guidance, which does not reflect the impact of the transaction.
Hillenbrand is a global diversified industrial company with businesses that serve a wide variety of industries around the world. Hillenbrand’s portfolio includes industrial businesses such as Coperion, Milacron Injection Molding & Extrusion, and Mold-Masters, in addition to Batesville, a recognized leader in the death care industry in North America.
Hillenbrand acquired Milacron Holdings Corp. in a cash and stock transaction valued at USD2 billion, including net debt of approximately USD686 million last year. Milacron operates in three segments: Melt Delivery & Control Systems, which designs and manufactures highly engineered, technically advanced hot runner and process control systems, mold bases, and components; Advanced Plastics Processing Technologies, which designs and manufactures plastics processing equipment and systems, including injection molding, extrusion, and auxiliary systems; and Fluid Technologies, which manufactures products that are used in a variety of metalworking processes.