In another deal that will take a small chemical company private, the phosphorus specialist Innophos has agreed to be acquired by the private equity firm One Rock Capital in a transaction valued at $932 million.
Kim Ann Mink, the Cranbury, New Jersey–based company’s CEO, says Innophos’s relatively small size and market capitalization limited its ability to pursue a growth strategy.
“We remain confident that our transformational strategy is the right path forward for Innophos,” she says in a statement. “However, executing on this strategy in an increasingly volatile macroeconomic and complex financial environment as a small-cap public company remains challenging and could take longer than initially expected.”
The company had sales of about $800 million and operating income of $86 million in 2018.
In a conference call in August, Mink told analysts that Innophos was considering more acquisitions to strengthen its food, health, and nutrition division, which makes specialty phosphates and phosphoric acid for food and beverage applications. Innophos added to the division in 2017 by buying the nutraceutical maker NutraGenesis and the dietary supplement firm Novel Ingredients.
One Rock’s $32-per-share offer represents an 18% premium over Innophos’s average closing share price over the 30-day period prior to the deal’s announcement. Innophos is commencing a 30-day “go-shop” period, during which it will solicit better offers.
This is not One Rock’s first involvement in chemicals. Earlier this year, the investment firm bought the plastics distributor Nexeo Plastics from the chemical distributor Univar. In 2016, it sold organophosphate maker Compass Chemical to Italmatch Chemicals.
Innophos will be the second public chemical company this year to ink an agreement to be taken private. In August, the small-molecule drug service firm Cambrex agreed to be acquired by the private equity firm Permira for $2.4 billion, including debt.
Private equity’s bread and butter is taking over small, unwanted segments of big firms. Acquisitions of entire public chemical companies don’t occur nearly as often, but they do happen. AMRI, another drug chemical firm, was taken private in 2017. And the C4 chemical specialist TPC was purchased by private equity firms in 2012.