UK specialty chemicals company Synthomer has agreed to acquire US-based Omnova Solutions in a move it said would create a global company with greater scale and a strong platform for future growth.

Synthomer is paying £654 million for the Beachwood, Ohio-based producer of polymers, dispersions, elastomers and other specialty chemicals. Omnova has two business segments: Specialty Solutions and Performance Materials. It operates 13 plants, located principally throughout the US, France, Portugal and China.

“This transaction is an important step in the continued execution of Synthomer's strategy with an acquisition that is both strategically and financially compelling,” commented Synthomer CEO Calum MacLean. “The acquisition of Omnova represents an attractive opportunity to materially expand our international business into North America and expand our presence in Europe and Asia, creating a global specialty chemical company.”

Synthomer said the combined company, which will have 38 production facilities in total, will offer a broad range of chemistries ranging from acrylic, vinylic and speciality emulsions polymers to styrene butadiene and acrylonitrile‐butadiene latexes catering to a diverse range of attractive end‐sectors.

The acquisition will also further enhance Synthomer’s global platform in specialty coatings and ingredients, increasing its exposure to coatings and additives for oil and gas drilling, cementing and stimulation end-sectors, as well as establishing a major global player in water-based polymer solutions.

The enlarged group is expected to derive 58% of its revenue from Europe, 19% from North America and 23% from Asia and the rest of the world.

Synthomer will also undertake a rights issue of up to £204 million to fund the acquisition, along with drawing on new debt facilities.

The transaction requires the approval of Synthomer’s shareholders as well as their approval to increase the company’s borrowing limit from £750 million to £1.5 billion to finance the debt element. Assuming all conditions are satisfied, Synthomer is expecting to close the deal in late 2019 or early 2020.

The UK group is targeting annual run-rate pre-tax cost synergies of $29.6 million by the end of the third year after the deal completes. The acquisition is expected to be earnings accretive in the first full financial year following completion and strongly accretive thereafter.