BEACHWOOD, OH, July 3, 2019 (Press Release) -OMNOVA Solutions Inc. today announced that it has entered into a definitive agreement to be acquired by Synthomer plc, a United Kingdom-based specialty chemical company, for $10.15 per share in cash. The Company also reported its second quarter fiscal 2019 earnings, which included the 10th consecutive quarter of year-over-year volume growth in its Specialty Solutions segment.
OMNOVA Chief Executive Officer Anne Noonan said, "Today, we announced that we have entered into a definitive agreement under which Synthomer plc (LON: SYNT) will acquire all of the outstanding common shares of OMNOVA Solutions for $10.15 per share in an all-cash transaction. The offer price represents a premium of 52% over OMNOVA's three-month weighted average share price of $6.67. The transaction has been approved unanimously by the OMNOVA and Synthomer boards of directors. We are pleased that Synthomer recognizes the hard work of our employees in executing our multi-year transformation into a leading global specialty solutions provider. OMNOVA complements Synthomer culturally, geographically and by market, while Synthomer's financial position provides for a very strong combined company that will be well positioned to accelerate growth. This transaction presents increased opportunities for the business and its employees to leverage the combined scale, grow more quickly and profitably, and enhance product innovation in ways that will benefit customers and employees," finished Noonan.
Completion of the transaction is subject to the satisfaction of certain customary closing conditions, including the receipt of regulatory approvals, and approval from Synthomer's and OMNOVA's shareholders. The transaction is not contingent on obtaining financing and is expected to close in late 2019 or early 2020.
Specialty Solutions Segment Results
Net sales for Specialty Solutions during the second quarter of 2019 increased $13.5 million, or 10.5%, to $142.3 million, compared with $128.8 million last year. OMNOVA Portugal accounted for $16.4 million of net sales in the quarter. Volume increases of $16.4 million, or 12.7%, were partially offset by price/mix of $0.1 million, or 0.2%, and unfavorable foreign currency translation of $2.8 million or 1.7%. Volumes were positive in the Company's Coatings, Adhesives & Sealants, and Oil & Gas businesses. This was the 10th quarter in a row of year-over-year volume increases in the Specialty Segment. The Laminates & Films business continued to see the impact of weakness in the RV market.
Segment operating profit was $20 million compared with $21.9 million last year. Adjusted Segment Operating Profit was $19.7 million, or 13.8% of net sales, compared to $22 million, or 17.1% of net sales, last year. (See Tables A and B.) Oil & Gas had strong growth during the quarter and ended with a record order book. The Oil & Gas growth, however, was not enough to offset the declines in Laminates & Films, which experienced an extremely strong quarter last year.
Performance Materials Segment Results
Net sales for Performance Materials during the second quarter of 2019 were $63.4 million, down $14.1 million from $77.5 million last year. Paper and carpet were the key drivers of the decline, reflecting the Company's strategic initiative to reduce dependence on commodity business in structural decline. Volume was down $10.2 million, or 13%, from last year, primarily due to the Company's exit from commodity paper chemicals. Price and mix were unfavorable by $2.8 million, or 3.6%, and foreign exchange was unfavorable by $1.5 million.
Performance Materials' segment operating profit for the quarter was $0.8 million, compared with $0.1 million last year. The operating loss this year includes $1.0 million of benefit primarily related to the closure and sale of the Green Bay facility. Adjusted Segment Operating Loss was $0.2 million, compared to earnings of $0.6 million last year. (See Tables A and B.) The primary driver of the year-over-year decline is the loss of the transitional commodity paper volumes from the second quarter of 2018, which had an unfavorable operating profit impact of approximately $1.0 million. The closure of the Green Bay plant is complete and the Company expects annual benefits of $7 million to $8 million to begin in June 2019, primarily benefiting the Performance Materials segment. The Company expects to realize approximately half of the savings during the second half of fiscal 2019, with the fully annualized savings realized in fiscal 2020.
OMNOVA Solutions Inc. is a global innovator of performance-enhancing chemistries and surfaces used in products for a variety of commercial, industrial and residential applications. As a strategic business-to-business supplier, OMNOVA provides The Science in Better Brands, with emulsion polymers, specialty chemicals, and functional and decorative surfaces that deliver critical performance attributes to top brand-name, end-use products sold around the world. OMNOVA's sales for the last twelve months ended May 31, 2019 were approximately $760 million. The Company has a global workforce of approximately 1,900.
Synthomer is a top-five global supplier of emulsion and specialty polymers, producing innovative formulations to support customers in a range of industries, from construction through paints and coatings to healthcare. With headquarters in London, the Group operates 25 production sites, four global R&D centers and has sales in all geographies. Synthomer has a strong track record of organic growth and progress has been further underpinned by three bolt-on acquisitions since 2016. The Group has approximately 2,900 employees and reported FY 2018 revenues of £1.6 billion ($2.1 billion USD).