TPG to sell Nexeo for $1.67bn

May 2016 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

In an agreement valued at $1.67bn, Nexeo Solutions, the world’s largest chemical and plastics distributor, has announced that it is to merge with WL Ross Holding Corp, a special purpose acquisition company (SPAC) sponsored by WL Ross Sponsor LLC.

Following the merger, WL Ross Holding Corp plans to change its name to Nexeo Solutions, Inc. and continue to trade on the NASDAQ Capital Market. In addition, the global alternative asset firm TPG, the current majority owner of Nexeo, is expected to retain a 35 percent stake in the new company.

A private company employing approximately 2450 employees with more than 27,500 customers and 1300 suppliers worldwide, Nexeo Solutions holds the number one position in US plastics distribution, having reported $3.9bn FY 2015 revenues.

“This transaction allows us to align our ownership structure in a way that accelerates our progress towards defining distribution,” said David Bradley, president and CEO of Nexeo Solutions. “With a strong, centralised operating platform and access to multiple sources of capital, I believe we will be positioned to grow organically and through acquisition.”

Key to the transaction is the WL Ross Holding Corp SPAC (sponsored by WL Ross Sponsor LLC, an affiliate of WL Ross & Co. LLC) which raised approximately $500m in cash proceeds following its initial public offering in June 2014. Founded in 2000, WL Ross & Co LLC is a global value oriented private equity firm which seeks niche opportunities in markets.

“We are pleased to partner with TPG to introduce Nexeo Solutions as a publicly listed company,” said Wilbur L. Ross, Jr, chairman of WLRH. “Over the last two years, we have evaluated a number of potential acquisitions for WLRH and we believe this opportunity offers a superior option for our shareholders. Nexeo Solutions presents a unique opportunity to invest in an industry-leading company supported by strong business fundamentals and long-term structural growth trends.

“Additionally, we believe the company is an ideal platform to further roll up the fragmented chemicals and plastics distribution space, creating significant value for shareholders. We look forward to our partnership with the Nexeo Solutions management team as we work with them to further capitalise on these attractive growth prospects.”

Once the merger is complete, the current Nexeo management team, headed by David Bradley, is expected to spearhead the company in its new guise, Nexeo Solutions, Inc. Furthermore, Wilbur L. Ross, Jr will become chairman of the board.

TPG, the global private investment firm selling Nexeo, has raised more than $18.6bn for its investment funds since the beginning of 2014. Founded in 1992 with over $70bn of assets under management, TPG’s investment platforms extend across a wide range of asset classes including private equity, growth venture, real estate, credit and public equity.

“It has been our privilege to work with Nexeo management since our acquisition of the business from Ashland in 2011 to build a world-class distribution platform poised for further growth,” said TPG’s Christopher Yip. “We look forward to remaining a significant owner of the business and a value-added partner to the company as it enters this new phase of growth.”

For the duration of the merger discussions, Jefferies LLC acted as sole M&A adviser and Vinson & Elkins LLP acted as legal adviser to Nexeo Solutions and TPG Capital. Additionally, L.P. Lazard acted as sole M&A adviser, and Deutsche Bank Securities Inc., Credit Suisse and Bank of America Merrill Lynch acted as equity capital markets advisers to WL Ross Holding Corp. The legal advisers for WL Ross Holding Corp were Kirkland & Ellis LLP and Skadden, Arps, Slate, Meagher & Flom LLP.

The sale of Nexeo Solutions is subject to approval by WL Ross Holding Corp. shareholders and other customary closing conditions, including regulatory approvals.

Fraser Tennant