- Buyer's Guide
Quaker Chemical and Houghton International recently announced an agreement to combine the two companies. Both Quaker Chemical and Houghton are headquartered in the Philadelphia area.
Under the terms of the agreement, Houghton shareholders will receive $172.5 million in cash and 24.5 percent ownership of the combined company, representing approximately 4.3 million shares of newly issued Quaker Chemical stock. In addition, Quaker Chemical will assume Houghton's debt and cash, with net debt of approximately $690 million at year-end 2016.
The agreement has been approved by both Quaker Chemical's board of directors and Houghton's board of directors with full support of the Hinduja Group, which will become Quaker Chemical's largest shareholder.
"The proposed combination of Quaker Chemical and Houghton International represents the next phase of our evolution and stays true to the vision of growing in our core specialties," said Michael F. Barry, chairman and chief executive officer of Quaker Chemical. "The new company will capitalize on best practices and expertise from both businesses."
Combining Quaker Chemical's and Houghton's product solutions and service offerings will allow the new company to better serve customers in the automotive, aerospace, heavy equipment, metals, mining, machinery, marine, offshore and container industries. The business will have an expansive metalworking platform comprised of specialty products that include removal fluids, forming fluids, protecting fluids, heat-treating fluids, industrial lubricants and greases. The expanded portfolio is expected to generate significant cross-selling opportunities and allow further expansion into growth markets that include India, Korea, Japan and Mexico.
"We are pleased to enter this agreement to unite these two distinguished and global companies," said Sanjay Hinduja, chairman of Houghton International, which is owned by the Hinduja Group through its Gulf Oil business. "Together we will strengthen our capabilities and business models to better serve the global market and all our stakeholders."
The completion of the transaction, which is expected by the end of 2017 or early 2018, is subject to customary closing conditions, including regulatory approvals and approval by Quaker Chemical shareholders. The companies will continue to operate independently until the transaction is completed.
Following the closing of the transaction, the new company is expected to have a 12-member board of directors, consisting of nine directors from Quaker Chemical and three directors to be nominated by the Hinduja Group. Barry will continue as chairman and chief executive officer of the new business, and the structure of the company will be determined in the period between signing and closing.
For more information, visit www.quakerchem.com.