Combined Company expected to drive growth and shareholder value with North America’s largest sales force, broadest product offering, and most efficient supply chain network in the industry

– Univar has hired an external advisor to evaluate strategic alternatives for Nexeo’s industry leading Plastics business, which may include a potential divestiture of the business.

Univar’s president and CEO, David Jukes, said: “This transformational combination is designed to create the premier global chemical and ingredients distributor, with exciting opportunities for our customers, suppliers, employees and investors. Together, we will drive growth and shareholder value with the largest North American sales force in chemical and ingredients distribution, the broadest product offering, and most efficient supply chain network in the industry. We expect the transaction to be accretive to earnings and cash flow beginning in the first full year post closing and to generate $100 million of annual run rate cost savings by the third year following close and reduce annual capital expenditures by $15 million immediately.”

“By combining the best capabilities, talent, and resources from our two companies we will be even better equipped to deliver superior service and expanded value to our customers and supplier partners. We expect to leverage Univar’s leading e-commerce and digital capabilities across Nexeo’s financial systems and centralized ERP platform to accelerate the digital transformation already underway at Univar and reduce costs, while enhancing the ease of doing business. Our shared commitment to safety and innovation and our common organization structures provide a strong foundation for a smooth and successful integration,” Mr. Jukes concluded.

Nexeo’s CEO, David Bradley, added: “We share Univar’s confidence in the future of our combined enterprise, given the strong strategic alignment across our business models, go-to-market strategies, superior product offerings, and digital capabilities. This combination represents a logical and compelling step forward, consistent with our focus on accelerating growth for the benefit of our customers, employees and suppliers.  We are especially pleased that Nexeo’s employees are highly valued by Univar, and that our shareholders will be able to participate in the company’s future success through ongoing equity ownership.”

Transaction Details
The merger agreement provides for each share of Nexeo stock issued and outstanding to be converted into 0.305 shares of Univar common stock and $3.29 in cash, subject to adjustment at closing, representing a purchase price of $11.65 per share of Nexeo common stock, based on Univar’s closing price on September 14, 2018 of $27.40. The cash consideration is subject to a potential reduction of up to $0.41 per share, based on Univar’s stock trading price prior to the completion of the acquisition. Following the close, existing Nexeo equity warrants will be exercisable for the merger consideration in accordance with the terms of the warrant agreement. The transaction is expected to deliver $100 million, or approximately $0.43 per share (after tax), in annual run-rate cost savings by the third year following close, and immediately reduce ongoing annual capital expenditures by $15 million. It is expected to be accretive to Univar’s Adjusted EPS beginning in the first full year following closing. Univar expects pro forma leverage ratio to be below 3.0x by the end of the first full year after closing.

Closing Details
The transaction has been unanimously approved by the Boards of Directors of both companies, and is anticipated to close in the first half of 2019, subject to the approval of both Univar and Nexeo shareholders, as well as receipt of regulatory approvals and satisfaction of other customary conditions. Nexeo’s key stockholders, TPG and First Pacific, have agreed to provide consent for the proposed transaction.

Financing
Univar intends to finance the cash portion of the transaction and refinance Nexeo’s existing debt with a combination of available cash and bank financing, for which it has received commitments.

Strategic Review of the Nexeo Plastics Business
Consistent with its focus on chemicals and ingredients distribution, Univar has hired an external advisor to evaluate strategic alternatives for Nexeo’s industry leading Plastics business, which may include a potential divestiture. Nexeo’s Plastics business is a distributor of prime thermoplastic resins and other products supporting OEMs, molders and design firms around the world, and will represent less than 10 percent of the combined companies’ earnings. The business will continue to be led by Shawn Williams, executive vice president Nexeo Plastics. The review is expected to be completed concurrent with the close of the transaction.

Advisors
For Univar, Goldman Sachs & Co. LLC is serving as financial advisor and Wachtell, Lipton, Rosen & Katz is serving as legal counsel. For Nexeo, Moelis & Company LLC is serving as financial advisor and Weil, Gotshal & Manges LLP is serving as legal counsel.