Lonza Group AG has agreed to acquire Arch Chemicals Inc. for US $1.2 billion in an effort to broaden its product portfolio, extend its emerging markets footprint and improve its natural currency hedge. According to the company, the acquisition capitilizes on the the strong Swiss franc, which has gained around 5% against the euro and 10% against the dollar in 2011.
The transaction reportedly assumes around US $170 million in Arch Chemicals’ debt and will be financed through the issuance of euro, Swiss franc and convertible bonds to limit dilution.
The acquisition is said to make Lonza the leader in the US $10 billion microbial control market, which caters to a wide range of industries such as the hospital and water sector. Lonza and Arch Chemicals reportedly have been cooperating for more than 20 years, which intensified during the past year and a half.
The deal is said to complement Lonza's pharma-based portfolio and strengthen its presence in emerging markets such as South Africa and Brazil.
The cash offer is subject to customary conditions including the tendering of more than two-thirds of Arch Chemicals’ outstanding shares of common stock and clearance from antitrust regulatory authorities. Lonza expects to start the tender offer by July 15, 2011, and completing it later this year. Lonza reportedly will continue to look for minor acquisitions in the next two years.