DuPont inks $2.3B acquisition of materials company
WILMINGTON – A month after spinning off its nutrition and bioscience division in a billion-dollar deal, DuPont is back on the hunt, acquiring a Chinese performance materials company for $2.3 billion.
On Monday morning, DuPont announced an all-cash agreement to acquire Laird Performance Materials from Advent International, one of the world’s largest private equity firms. The deal is expected to close in the third quarter of 2021, subject to regulatory approvals.
Headquartered in Shanghai, Laird is a leading producer of high-performance electromagnetic shielding and thermal management that manages heat and protects devices from electromagnetic interference. It has a workforce of more than 4,300 employees at 11 manufacturing sites in North America, Europe, and Asia.
With 2020 revenues of $465 million, Laird has reportedly delivered consistent high single-digit growth rates, gross margins of about 50% and EBITDA margins of about 30%.
In a release announcing the deal, DuPont officials said that “Laird Performance Materials is aligned with DuPont’s strategic objective of shifting its portfolio increasingly towards differentiated products in attractive markets with long-term secular growth trends.”
“The acquisition of Laird Performance Materials is a significant step in advancing DuPont’s strategy to grow as a global innovation leader and premier multi-industrial company,” added Ed Breen, executive chairman and CEO of DuPont, in a statement. “Laird Performance Materials is a strategic and complementary addition to the Electronics & Industrial (E&I) business, and our applied material science expertise together with Laird Performance Materials’ industry-leading application engineering capabilities further strengthens DuPont as an essential partner for major electronics OEMs and manufacturers.”
The transaction combines DuPont’s technology portfolio in films, laminates, and plating chemistry with Laird Performance Materials’ electromagnetic shielding and thermal management solutions. DuPont reported that the combined portfolio would target rapidly growing advanced electronics applications supporting smart/autonomous vehicles, 5G telecommunications, artificial intelligence, internet of things, and high-performance computing.
DuPont expects to realize approximately $60 million in pre-tax run-rate cost synergies by the end of 2024 with the majority realized in the first 18 months post-closing. The estimated one-time cost to the organizational merger is approximately $40 million.
“This transaction represents another strategic step forward in sharpening our focus and directing our investments towards high-value, high-growth opportunities. We remain committed to a balanced capital allocation policy that delivers strong returns to shareholders and includes organic growth, targeted M&A, and shareholder remuneration,” Breen added.
In another attempt to curry favor with investors Monday, DuPont announced that its board approved a new $1.5 billion share buyback program. The 2021 program will expire at the end of June 2022, but the company’s 2019 buyback program, which expires June 1, still has about $1 billion in spending authority. Officials reported in last month’s earning conference that they expect to spend that remaining authority before the deadline.