Mexichem Finally Clinches Wavin Buy

After several failed bids, Mexico’s Mexichem has finally managed to seal its purchase of Dutch plastic pipe maker Wavin by offering to pay EUR531m ($704m) for the company. The move creates the world’s largest player in the plastic pipe market with EUR4bn in sales. Mexichem upped its offer to EUR10.5 per common share, or a 177% premium to the EUR3.79 per share close on November 18, the date originally used to mark Mexichem’s first offer, the company says. The Mexican company originally offered EUR8.5 per share in late November, later increasing it to EUR9 per share on December 9 and to EUR10 per share in early January. Taking Wavin’s 50.58m outstanding shares, the final EUR10.5 per share offer values the company at roughly EUR531m or an implied enterprise value to Ebitda of between 8.2x and 8.3x, according to data from people familiar with the deal. Such calculations assume net debt between EUR300m and EUR330m and an estimated 2012 Ebitda between EUR100m and EUR105m. Mexichem is financing the acquisition with EUR520 from its own cash and the rest with several credit lines. Mexichem retained Barclays Capital and Citigroup as advisors, while Bank of America Merrill Lynch was retained by Wavin. The deal became possible after the parties resolved lingering issues surrounding employee rights and pensions of Wavin’s Dutch workers. The companies have announced there will be no layoffs as a result of the merger.