Solenis and Diversey Holdings, Ltd. entered into a definitive merger agreement under which Solenis will acquire Diversey in an all-cash transaction valued at about $4.6 billion. Upon completion of the merger, Diversey will become a private company.
Diversey’s brands include household names such as Dove, Lysol and Air Wick. Products range from body washes to oven cleaners and personal deoderants.
Diversey is about half the size of Solenis, which has estimated revenues of more than $4 billion. Private-equity funded Solenis has been growing rapidly with a series of large and small acquisitions. The company got its start with the acquisition of chemical holdings of Ashland, formerly Hercules.The transaction also moves Solenis into the consumer market, barring a decision to sell off those product lines.
Headquartered near Wilmington, Solenis is a manufacturer of specialty chemicals used in water-intensive industries, which Platinum Equity acquired control in 2021 from another private equity company. Diversey is publicly traded provider of hygiene, infection prevention and cleaning solutions based in Fort Mill, SC.
“The merger presents a unique opportunity to enhance value and create a more diversified business with increased scale, broader global reach, and superior customer service capabilities. It will enable the combined company to grow and provide a number of attractive cross-selling opportunities, including meeting increasing customer demand for water management, cleaning and hygiene solutions,” said Phil Wieland, Chief Executive Officer of Diversey.
Solenis CEO John Panichella will lead the combined company.
“This is a strategic combination of two leading global products, services, and technologies providers with proven track records of product innovation who offer truly differentiated solutions to customers,” said Panichella. “In combining these two complementary businesses, we expect to usher in a new and exciting chapter in our long history of helping customers tackle core challenges such as water and energy management, partnering on sustainability issues to work towards a cleaner, safer world, and reducing environmental impacts. With continued support from Platinum Equity and now Bain Capital, we are confident that we’ll maximize the opportunities ahead.”
“This is a merger of two leading businesses that is fully complementary,” added Eric Foss, non-executive chairman of the board of Diversey. “We believe the transaction creates significant value realization for our shareholders.”
Solenis is a portfolio company of Platinum Equity. Bain Capital, which invested in Diversey in 2017 and subsequently took the company public in 2021, is currently the largest shareholder of Diversey. Under the terms of the transaction, Bain Capital will contribute approximately 56% of its existing equity into Solenis at an implied value per Diversey share of $7.84 and will sell its remaining shares to Solenis for cash at the same price.
After negotiations with a special committee of Diversey’s Board of Directors composed entirely of independent directors (the “Special Committee”), Bain Capital agreed to accept less consideration per share than the consideration to be paid to the other holders of Diversey’s shares.
In connection with the transaction, Solenis has entered into a support agreement with Bain Capital, pursuant to which Bain Capital has agreed to vote all of its Diversey shares (which represent approximately 73% of Diversey’s outstanding shares) in favor of the transaction, subject to certain terms and conditions. Solenis intends to finance the transaction with a combination of committed debt and equity financing, including the contribution by Bain Capital.
The merger is expected to be completed in the second half of 2023.
Under the terms of the agreement, Diversey shareholders (other than shareholders affiliated with Bain Capital Private Equity will receive $8.40 per share in cash, which represents a premium of approximately 41% over Diversey’s closing share price on March. Bain Capital will receive $7.84 per share in cash and will roll over a portion of its shares of Diversey into an affiliate of Solenis in exchange for common and preferred units of the affiliate.
