Wilmington, Delaware-based global chemical company DuPont has entered into a definitive agreement to acquire Spectrum Plastics Group from AEA Investors for $1.75 billion, the company announced May 2. The purchase price represents roughly 15.6 times Spectrum’s estimated 2023 EBITDA, according to a news release.
With a history dating back to 1949, Spectrum’s current iteration as a manufacturer of specialty medical devices and components was formed in 2017. Based in Alpharetta, Georgia, Spectrum focuses on areas of medical technology including electrophysiology, surgical robotics, structural heart and cardiovascular.
“We have been focused on Spectrum for a long time and our team is extremely excited for this opportunity,” DuPont Executive Chairman and CEO Ed Breen said in the release. “Spectrum is a compelling strategic complement to our existing healthcare portfolio, which already includes businesses with best-in-class innovation, deep customer relationships and with strong growth and profitability. With this combination, we’ll be able to offer customers additional innovation and manufacturing capabilities with a broader and more integrated solution set.”
“Spectrum is a best-in-class company for the development and advanced manufacturing of specialty medical devices and components,” AEA Investors Partner Rahul Goyal said in the release. “Through investments in the commercial and engineering organizations and expansion of its manufacturing operations, Spectrum has enhanced its capabilities and offerings in medical end markets and achieved significant growth and increased profitability. We are proud to have supported Spectrum’s transformation for the past five years and believe DuPont is an excellent partner for Spectrum. The combination is ideally positioned to continue providing excellent customer service and highly-engineered solutions for critical healthcare applications.”
The purchase price will be paid from DuPont’s existing cash balances. The transaction is expected to close by the end of 2023’s third quarter, subject to customary closing conditions, according to the release.
Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to DuPont on the transaction. Frank, Harris, Shriver & Jacobson LLP served as legal advisor and Piper Sandler Companies served as financial advisor to Spectrum and AEA Investors.
DuPont also reported its first-quarter 2023 financial results on May 2. The chemical company saw its sales decrease 8% year-over-year, including a 3% decline in organic sales. Sales were down due to a 7% decrease in volume as a result of decreased consumer electronics spending and channel inventory destocking, along with softness in construction end-markets, according to the report.
“We delivered earnings in line with our expectations for the first quarter of 2023 which reflects our team’s continued strong execution despite a lower volume environment in electronics and construction-related end markets,” Breen said in the report. “While sales within Semiconductor Technologies and Interconnect Solutions were down during the quarter as expected, Industrial Solutions as well as the Water & Protection segment delivered organic sales growth and we saw continued robust demand within our auto adhesives portfolio. Our businesses are well-equipped to leverage leading market positions and accelerate growth when consumer-driven, short-cycle electronics end markets recover.”