Publicly traded Cabot Corporation has agreed to sell its purification solutions business, Norit Activated Carbon, to One Equity Partners for $111 million.
Norit is a manufacturer of over 150 different activated carbon formulations including powdered activated carbon, granular activated carbon, and extruded activated carbon.
Activated carbon, also called activated charcoal, is a form of carbon that has been processed to create millions of tiny pores between the carbon atoms, resulting in an increased surface area which makes the material suitable for adsorption, a process by which impurities are removed from fluids, vapors or gas.
Norit’s products are used to remove pollutants, contaminants and other impurities from water, air, food and beverages, and pharmaceuticals. The company’s activated carbon products are also used as colorants, carriers and catalysts in industrial processes. In addition to its activated carbon products, Norit also provides a range of on-site systems and services, including carbon reactivation services. Norit operates two facilities in North America, five facilities in Europe and participates in three joint ventures in Canada, Asia and Mexico.
“This pending partnership with OEP is the beginning of an exciting new chapter for Norit,” said Imtiaz Kathawalla, a vice president and general manager of Norit. “The senior management team and I are eager to collaborate closely with OEP’s professionals and tap their experience in support of our growth through geographic expansion, product offering diversification, technology innovation and strategic acquisitions.”
According to Norit, the global activated carbon market is expected to grow at a 9% CAGR due, in part, to increased regulatory standards around air purification, water treatment, renewable natural gas purification and pharmaceutical drug production.
In fiscal 2021, Norit generated $257 million in revenue and $26 million in EBITDA (down from $27 million in 2020). Based on a $111 million purchase price this equates to a 4.3x EBITDA valuation multiple.
“We are proud to make this investment in Norit, whose product offering uses renewable materials to increase access to clean air and water,” said Joe Huffsmith, a managing director at OEP. “Norit has been a leading player in the activated carbon space for over 100 years, and we feel fortunate for the opportunity to partner with the Norit team on this next phase of the company’s growth and development.”
OEP is a middle-market private equity firm focused on the industrial, healthcare, and technology sectors in North America and Europe. OEP spun out of JPMorgan in 2015 and has closed more than 300 transactions worldwide since its founding in 2001. The firm has offices in New York, Chicago, Frankfurt and Amsterdam.
“We are pleased to have reached an agreement with OEP as they have a proven track record of advancing market-leading industrial companies and are committed to the future success of the business,” said Sean Keohane, the CEO of Cabot. “At the same time, this transaction will allow us to focus resources on our core business segments and invest in areas where we see strong future growth and innovation potential for Cabot, such as battery materials.”
Boston-headquartered Cabot Corporation (NYSE: CBT) is a specialty chemicals and materials company that supplies rubber and specialty carbons, activated carbon, elastomer composites, inkjet colorants, conductive compounds, silica and aerogel products.
Credit Suisse is the financial advisor to Cabot, and PNC Bank is providing debt financing to support the acquisition of Norit by OEP. This transaction is expected to close by the end of the first quarter of 2022.
© 2021 Private Equity Professional | November 30, 2021