Zep Inc. Enters into Definitive Agreement to Be Acquired by New Mountain Capital
Acquirer
Target
Zep Inc., a leading consumable chemical packaged goods company that manufactures a wide variety of high-performance maintenance and cleaning chemicals, and New Mountain Capital, a leading growth-oriented private equity firm, announced that they have entered into a definitive merger agreement under which a fund managed by New Mountain Capital, L.L.C. will acquire all outstanding shares of Zep Inc. common stock for $20.05 per share in cash. The transaction is valued at approximately $692 million, including net debt.
Under the terms of the agreement, Zep Inc. stockholders will receive $20.05 in cash for each share of Zep Inc. common stock they own. The purchase price represents a 23% premium to Zep Inc.’s 90-day volume weighted average stock price for the period ended April 7, 2015. The agreement was unanimously approved by Zep Inc.’s Board of Directors.
“During the past year, we conducted a thorough review of strategic opportunities to enhance value for all stakeholders, and we are pleased to have reached this agreement, which we believe delivers immediate and substantial cash value to our stockholders,” said John K. Morgan, Chairman, President and Chief Executive Officer of Zep Inc. “We also are confident that this transaction will allow Zep Inc. to continue to deliver the high quality products and services our customers have come to expect from us as well as provide additional opportunities for our associates from future growth and business building. New Mountain Capital is a strong investor with a proven track record as a business builder with substantial resources and expertise, and we look forward to continued success as a private company under their ownership.”
“Zep Inc. is an industry leader with significant growth potential and fits perfectly with New Mountain Capital’s investment philosophy of investing in market leaders in sustainable growth industries,” said Matthew S. Holt, Managing Director of New Mountain Capital. “We look forward to joining with the Zep Inc. management team and all of the company’s talented associates as we continue to serve Zep Inc.’s global customer base.”
The acquisition is subject to customary closing conditions, including receipt of stockholder and regulatory approvals. The definitive agreement also contains a go-shop provision under which Zep Inc. may solicit alternative proposals from third parties during the next 30 calendar days on customary terms and conditions for transactions of this nature. The Zep Inc. Board, with the assistance of its advisors, has the right to actively solicit acquisition proposals during this period. There can be no assurances that this process will result in any alternative transaction. The acquisition requires the affirmative vote of holders of a majority of the outstanding shares of the Zep Inc. common stock, which will be sought at a special meeting of shareholders. New Mountain Capital has received fully committed debt financing in connection with the acquisition and the acquisition is not subject to a financing condition. The transaction is currently expected to close in the third calendar quarter of 2015.