Italmatch Chemicals Acquires ELCO Parent

Keywords: Italmatch, ELCO,

Detrex Corporation and Italmatch Chemicals Group announced yesterday that they have entered into a definitive agreement to merge. The boards of directors of both companies have unanimously approved the transaction.

Detrex Corp., a privately held company based in Cleveland, Ohio, U.S.A., is the parent of Elco Corp. Detrex manufactures high-performance specialty chemicals serving three distinct business areas: additives for industrial petroleum products, high purity hydrochloric acid for the semiconductor industry and specialty chemicals.

Italmatch Chemicals, based in Genova, Italy, specializes in performance additives for lubricants, water treatment, oil & gas and plastics. Italmatch Chemicals is controlled by funds managed by Ardian France S.A., the largest European independent private investment company and a world leader in private equity, which acquired the majority of Italmatch together with management in July 2014.

A newly formed subsidiary of Italmatch will acquire Detrex for USD27.00 a share. Under the terms of the agreement dated November 10, 2017, each share of Detrex common stock outstanding immediately prior to the merger will be converted into and exchanged for the right to receive USD27.00 in cash, which represents an 8% premium over the closing bid price of Detrex’s common stock on November 9 as quoted on the website of OTC Markets Group.

“After thorough analysis, the board has unanimously endorsed this proposed sale, which we believe maximizes value for our stockholders. On behalf of the board, I would like to recognize our outstanding team of dedicated employees who have made Detrex and its operating subsidiary, The Elco Corporation, the success it is today. Elco and Italmatch share the same high operating standards and have a similar overall company culture. The board believes this is a great opportunity for Elco to be a part of an organization with deeper resources and operational scale in the specialty chemicals business. We look forward to working with Italmatch to promptly complete the transaction,” said Thomas E. Mark, Detrex president and CEO.

“Italmatch Chemicals is a leading global specialty additives company with EUR340 million (USD398 million) in sales and a strong focus and commitment, through R&D and innovation, on the industrial lube oil markets. We have known Elco, its products and management team for many years. Elco will bring highly complementary products, synergies and geographical aspects, as Italmatch is focused on EMEA markets and Elco on NA/LATAM markets, with sales and organizational synergies in other regions. In addition, from a product portfolio point of view, Italmatch is a leader in special synthetic base stock and anti-wear additives, and Elco has a distinctive and very complementary position in EP additives and Ad-pack for grease and MWF. We believe both companies share the same spirit and interest for innovation and we are confident of a bright future together,” said Sergio Iorio, managing director of Italmatch Chemicals Group.

The proposed merger is expected to close by December 31, 2017, subject to the approval by the holders of at least two-thirds of the issued and outstanding shares of common stock of Detrex and the satisfaction or waiver of customary closing conditions. There is no financing condition to complete the proposed acquisition. Directors and major shareholders representing approximately 52% of the shares have agreed to vote in favor of this proposal unless a better offer is received.

KeyBanc Capital Markets Inc., acting as financial advisor to the Detrex board, has provided a fairness opinion to the board in connection with the transaction. Clark Hill PLC is acting as legal advisor to Detrex in connection with the proposed merger. Lincoln International is acting as financial advisor to Italmatch in connection with the transaction. Dykema Gossett PLLC and Giovannelli e Associati are acting as legal advisors to Italmatch in connection with the transaction.