14.04.2014 16:53:48

Koppers To Buy Osmose's Wood Preservation And Railroad Services Businesses

(RTTNews) - Koppers Holdings Inc. (KOP), a producer of carbon compounds and treated wood products, said Monday that it has agreed to acquire the wood preservation and railroad services businesses of Osmose Holdings, Inc. for $460 million.

Under the deal, Koppers' wholly-owned subsidiary, Koppers Inc., will acquire the business that had combined revenues of about $390 million in 2013. The transaction is expected to close in the third quarter of 2014.

Koppers noted that the base purchase price for the acquired businesses of $460 million is subject to certain closing adjustments. The base purchase price includes the value of an anticipated tax election that Koppers expects will provide cash tax savings of about $7 million annually over the next 15 years.

Walt Turner, President and CEO of Koppers, said, "Acquiring these businesses from Osmose represents another important step in our long-term growth strategy by expanding both our chemicals offering and extending our existing railroad and utilities products and services platform. This unique growth opportunity will complement our existing businesses through leading market positions in strategic end-markets."

Buffalo, New York-based Osmose is comprised of utilities services, wood preservation technologies, and railroad services. The company is a privately-owned corporation and a portfolio company of private equity firm Oaktree Capital Management L.P.

Osmose's wood preservation business develops, manufactures and markets wood preservation chemicals and wood treatment technologies. The business, with operations and sales in North America, Latin America, Europe, and Australasia, accounted for about $350 million of the acquired business' combined revenue in 2013. The business's products serve a diverse range of end-markets including infrastructure, residential and commercial construction, and agriculture.

Osmose's railroad services business is a provider of railroad infrastructure services, including bridge inspection, engineering, maintenance and repair, and construction services for the Class I and shortline railroads in North America. The business generated revenues of $40 million in 2013.

Koppers plans to finance the acquisition through new and existing bank debt, including a new term loan and an increase to the company's existing revolving credit facility. The company noted that committed financing will be provided by PNC Bank, National Association.

Barclays Capital Inc. served as financial advisor to Koppers in regard to the transaction, while K&L Gates LLP acted as legal counsel to the company.

In Monday's regular session, KOP is trading at $42.62, up $3.23 or 8.20 percent on a volume of 52,618 shares.

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