An affiliate of One Rock Capital Partners – a middle-market private equity firm based in New York, USA – has agreed to acquire Innophos Holdings for approximately $932 million, including assumed debt.

Headquartered in Cranbury, New Jersey, Innophos produces specialty phosphates for the food, health, nutrition and industrial markets. The company’s board of directors has unanimously approved the takeover.

“After careful consideration and a thorough review of our strategic alternatives, including an outreach program to multiple potential financial and strategic partners over several months, the board determined that a sale to One Rock is in the best interest of all of our stakeholders,” said Innophos chairman, president and CEO Kim Ann Mink.

In April 2017, Innophos announced its five-year growth plan – Vision 2022; The Path to Revitalized Growth – in which it targets revenue growth of $1.25 billion and a 250 basis point improvement in adjusted EBITDA by 2022.

However, while Mink said the company is confident that its transformational strategy is the right path forward, she added that “executing on this strategy in an increasingly volatile macroeconomic and complex financial environment as a small-cap public company remains challenging and could take longer than initially expected.”

Tony Lee, One Rock’s managing partner, said the investor’s goal is to maximize Innophos’s growth potential by continuing to expand in high-growth food, health and nutrition markets, while further strengthening and optimizing its cash-generative core business.

The agreement includes a 30-day “go-shop” period, starting immediately, during which Innophos will solicit alternative acquisition proposals.

However, US law firms including Ademi & O’Reilly and Halper Sadeh said they are investigating the proposed deal with One Rock, which has offered $32 per Innophos share.

Ademi & O’Reilly said One Rock is acquiring Innophos at a “substantial discount,” especially given that the phosphate producer’s financial outlook is improving. The Milwaukee-based company, which focuses on corporate fraud, added that the merger agreement “unreasonably limits” competing bids and imposes a termination penalty if Innophos accepts a superior bid.

The law firms’ investigations will look at whether Innophos and its board of directors violated federal securities laws and/or breached their fiduciary duties to shareholders and whether they are obtaining a “fair and best possible” price.

Assuming it proceeds, the transaction is expected to complete in the first quarter of 2020, subject to both shareholder and regulatory approvals along with the usual closing conditions. Once finalized, Innophos shares will be delisted and the company will become a privately held organization.

Funding for the deal will come from a combination of committed equity financing provided by affiliates of One Rock as well as debt financing from several institutions.