PITTSBURGH, PA - Koppers Inc., a wholly-owned subsidiary of Koppers Holdings Inc. (NYSE: KOP), has signed an agreement to acquire the Wood Preservation and Railroad Services businesses of Osmose Holdings, Inc. (Osmose), collectively, the "Acquired Businesses." The base purchase price for the Acquired Businesses is $460 million and is subject to certain closing adjustments. The base purchase price includes the value of an anticipated 338(h)(10) tax election that is expected to provide cash tax savings of approximately $7 million annually over the next 15 years. Revenues for the Acquired Businesses in 2013 were approximately $390 million. Koppers plans to finance the purchase through new and existing bank debt, including a new term loan and an increase to the company's existing revolving credit facility. The transaction is expected to close in the third quarter of 2014, subject to regulatory filings and customary closing conditions.
Osmose's Wood Preservation business is the global leader in developing, manufacturing, and marketing wood preservation chemicals and wood treatment technologies. The business has operations and sales in North America, Latin America, Europe, and Australasia, and accounted for approximately $350 million of the Acquired Business' revenue in 2013. The business's products serve a diverse range of end-markets including infrastructure, residential and commercial construction, and agriculture.
Osmose's Railroad Services business is a leading provider of railroad infrastructure services, including bridge inspection, engineering, maintenance and repair, and construction services for the Class I and shortline railroads in North America. The business accounted for $40 million of revenue in 2013.
Walt Turner, President and CEO of Koppers, said, "Acquiring these businesses from Osmose represents another important step in our long-term growth strategy by expanding both our chemicals offering and extending our existing railroad and utilities products and services platform. This unique growth opportunity will complement our existing businesses through leading market positions in strategic end-markets. Importantly, the business culture of Osmose is closely aligned with that of Koppers, which should provide for a smooth integration allowing us to fully capture synergies and realize the earnings and margin accretion that we have identified during our due diligence process. The addition of these two businesses is very exciting for Koppers and will strongly contribute towards our ultimate goal of increasing shareholder value."
Barclays Capital Inc. acted as financial advisor to Koppers in regard to the transaction, and K&L Gates LLP acted as legal counsel to the Company. Committed financing will be provided by PNC Bank, National Association.
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