Omnova Solutions Soars on Deal to Be Acquired by Synthomer
TheStreet
Shares of Omnova Solutions (OMN) - Get Report soared 55.4% to $9.98 Wednesday after the industrial chemical company said it was being acquired by London-based Synthomer in a roughly $455.2 million transaction.
Under the terms of the agreement, shareholders on the Beachwood, Ohio-based company will receive $10.15 in cash for each Omnova share they own. Omnova CEO Anne Noonan said in a statement that the offer price is a premium of 52% over Omnova's three-month weighted average share price of $6.67.
The transaction will be financed through a rights issue of up to $257 million is expected to close late this year or early in 2020.
Upon completion, Synthomer expects the deal to add to its earnings in the first financial year and expects an annual pretax cost savings of $29.6 million by the end of the third year. Synthomer has about 2,900 employees and reported fiscal-year revenue of $2.1 billion in 2018.
In addition, Omnova reported fiscal second-quarter earnings and sales that missed Wall Street's expectations. Sales totaled $205.7 million, essentially flat in comparison with the year-ago total of $206.3 million. Earnings fell about 33% to $5.6 million.
"As anticipated, we continued to face challenging economic conditions and volatile markets during the quarter," Noonan said. " In spite of this market uncertainty, our specialization strategy made continued progress."