The company Wilbur Ross (Trades, Portfolio)’s WL Ross Holding Corp. announced plans to merge with in March will begin trading on the Nasdaq on Friday.
Per the agreement, WL Ross Holding Corp., a special purpose acquisition company sponsored by an affiliate of WL Ross & Co., would buy and change its name to Nexeo Solutions. The deal, valued at $1.58 billion, or $10 per share and 35 million WL Ross shares, closed Thursday. The private company is expected to go public Friday with the ticker symbols NXEO, NXEOU and NEOW.
Woodlands, Texas-based Nexeo (NXEO, Financial) is the largest U.S. plastic distributor and largest global chemical and plastic distributor, connecting customers and suppliers. Founded in 2011, it has $3.9 billion in 2015 revenues, 170 locations and operations in North America, Europe and Asia.
"As a publicly traded company, we believe that Nexeo Solutions is ideally positioned to grow its market share and roll up the fragmented chemicals and plastics distribution space, Christopher Yip of TPG.Nadim Qureshi, managing director of WL Ross & Co., said. “We look forward to working with the management team and TPG to capitalize on these growth prospects.”
WL Ross Holding Corp. was created to find a merger, acquisition or reorganization of one or several companies and started trading in 2014. It found what Ross, chairman of WL Ross Holding, called “a superior option for our shareholders” after seeking a suitable company for two years. It bought a majority sake in the company on March 21 for roughly $1.7 billion.
A private equity firm, TPG Capital, formed the company in 2010 when it purchased a distribution unit from Ashland Inc. (ASH, Financial). The firm will maintain 35% ownership.
In the initial announcement, Ross described the deal as “a unique opportunity to invest in an industry-leading company supported by strong business fundamentals and long-term structural growth trends.”
Nexeo’s current leadership, including CEO and President David Bradley, will remain in place, though Ross will join assume the role of chairman of the board.
In the first quarter, Nexeo reported a 15% year-over-year revenue decline to $862.2 million due to lower oil and commodity prices and weaker customer demand driving down sales volumes and selling prices. Sales declined by 23% in its chemical segment and 6.9% in plastics.
Nexeo also ended the quarter with $59.7 million in cash, down from $127.7 million in the September quarter. Long-term debt stood at $805 million compared to $863 million for the same periods.
Ross, founder of private equity firm WL Ross & Co., traditionally focuses on distressed investing and salvaging failed companies. He has a public equity portfolio comprising only seven stocks, dominated by Navigator Holdings (NVGS, Financial), a 62.9% position, and Sun Bancorp Inc. (SNBC, Financial)., worth 15.7%.
See the portfolio here. Also, become a member of GuruFocus.
