One Rock Inks Deal to Buy Innophos
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One Rock Inks Deal to Buy Innophos

One Rock Capital Partners has agreed to acquire publicly traded Innophos for $32 per share in cash in a transaction valued at approximately $932 million. This transaction has been unanimously approved by the board of directors of Innophos.

Innophos (NASDAQ: IPHS) produces ingredients that are used in food, health, nutrition, and industrial applications. The company’s ingredients include phosphates, phosphoric acids, as well as other mineral, enzyme, and botanical-based products that are used as flavor enhancers in beverages; electrolytes in sports drinks; texture modifiers in cheeses; leavening agents in baked goods; and calcium and phosphorus fortification in food and beverages.

Other products include sodium tripolyphosphate (STPP) which is used in industrial and institutional cleaners, automatic dishwashing detergents, and consumer laundry detergents; and granular triple super-phosphate (GTSP), a fertilizer product used to increase crop yields in various agricultural sectors. Innophos was founded in 2004 and is headquartered in Cranbury, NJ with manufacturing operations across the United States, Canada, Mexico and China.

“After careful consideration and a thorough review of our strategic alternatives, including an outreach program to multiple potential financial and strategic partners over several months, the Board determined that a sale to One Rock is in the best interest of all of our stakeholders,” said Kim Ann Mink, the chairman, president and chief executive officer of Innophos.

For the trailing four quarters ending September 30, 2019, Innophos had preliminary trailing four-quarter revenues of $759 million with an EBITDA of $77 million. Based on the purchase price of $932 million, this equates to a valuation multiple of just over 12x.

“Innophos’ innovative ingredient solutions are used by world-leading brands across a wide range of attractive food, health, nutrition and industrial markets,” said Tony Lee, a managing partner of One Rock. “The company has a strong foundation and a transformative growth strategy. In drawing upon One Rock’s extensive experience, part of our goal is to maximize Innophos’ growth potential by continuing to expand its presence in high-growth food, health and nutrition markets, while further strengthening and optimizing its cash-generative core business.”

One Rock invests in companies that are active in the chemicals and process industries; specialty manufacturing and healthcare products; business and environmental services; and food manufacturing and distribution. The firm has a strategic relationship with Mitsubishi Corporation which provides resources to One Rock and its portfolio companies.  One Rock was formed in 2010 by managing partners Tony Lee and Scott Spielvogel and is based in New York.

The agreement between One Rock and Innophos includes a 30-day “go-shop” period during which the company, assisted by its legal and financial advisors, will solicit alternative acquisition proposals.

Lazard is the financial advisor to Innophos and Baker Botts is providing legal services. RBC Capital Markets is the financial advisor to One Rock with Latham & Watkins providing legal services.

The closing of this transaction is expected to occur in the first quarter of 2020.

© 2019 Private Equity Professional | October 23, 2019

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