DuPont, a leading global innovation and technology-based company, has announced the acquisition of Spectrum Plastics Group from AEA Investors.
The acquisition is expected to be completed by the end of the third quarter of 2023, subject to regulatory approvals and customary closing conditions.
The purchase price of $1.75 billion will be paid from existing cash balances, and the transaction is expected to be immediately accretive to DuPont’s adjusted EPS and achieve high single-digit ROIC by year five.
Strategic Complement to DuPont’s Healthcare Portfolio
The acquisition of Spectrum Plastics Group is a strategic complement to DuPont’s existing healthcare portfolio. It strengthens DuPont’s position in the fast-growing, low-cyclicality healthcare markets, with approximately 10% of DuPont’s consolidated revenue coming from healthcare after the acquisition. Spectrum Plastics Group is a recognized leader in advanced manufacturing of specialty medical devices and components, serving 22 of the top 26 medical device OEMs with a strategic focus on key fast-growing therapeutic areas such as structural heart, electrophysiology, surgical robotics, and cardiovascular.
Best-in-Class Advanced Manufacturing Capabilities
Spectrum Plastics Group adds best-in-class advanced manufacturing capabilities and multi-decade customer relationships with the world’s largest medical device OEMs. With more than 2,200 employees and consistently high single-digit growth rates for many years, Spectrum Plastics Group has a strong financial performance, advanced manufacturing expertise, and customer-centric orientation. Spectrum Plastics Group is fully aligned with DuPont’s strategic objective of delivering innovative specialized materials and solutions into attractive end markets with long-term secular growth trends.
Transaction Details and Advisors
The purchase price of $1.75 billion represents a 15.6x multiple on 2023 forecast EBITDA based on the net purchase price, 13.2x including expected cost synergies of ~$20 million. Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to DuPont. Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisor and Piper Sandler Companies served as financial advisor to Spectrum and AEA Investors.
Comments from DuPont’s CEO and AEA Investors’ Partner
Ed Breen, Executive Chairman and CEO of DuPont, expressed his excitement about the acquisition, stating that “Spectrum is a compelling strategic complement to our existing healthcare portfolio.” Rahul Goyal, a Partner at AEA Investors, added that “DuPont is an excellent partner for Spectrum” and that the combination is “ideally positioned to continue providing excellent customer service and high-ly-engineered solutions for critical healthcare applications.”