The silence, as they say, surrounding the pending Platinum Specialty Products acquisitions for OMG and now Alent, has been deafening.
Could it be because it’s summer, and people aren’t paying as close attention?
Could it be because that’s how the respective companies prefer it?
We receive announcements several times a week from various folks within Alent, but they haven’t said boo about the buyout. And the folks in the industry I’ve queried about it haven’t been quick to respond either, both on the Alpha and the Enthone sides.
Platinum is aggressively buying up companies in the solder and electroplating/finishing materials space, first having bid for OMG’s PCB chemicals unit (the former Electrochemicals) and now agreeing to terms for Alent, the former Cookson metals divisions which include Enthone and Alpha.
The aggregate price tag for the various units: $2.67 billion, including assumed debt.
That will add to the debt Platinum assumed when it acquired MacDermid in 2013 for $1.8 billion. The weight of these transactions is making folks inside and outside the industry a bit cautious, as this recent statement from Moody’s indicated.
Platinum paid nearly $40 million in interest in the first quarter alone, and its operating profit for the period was just $2.2 million. The additional acquisitions will further stress a balance sheet that carried $1.4 billion in debt as of Dec. 31.
Dan Leever, the man at the helm of Platinum following its buyout of MacDermid, knows the PCB industry inside and out, but it’s unclear to me how much further they can go before running into a Viasystems-like situation.
If you read this announcement about Cookson splitting in two the first question must be, what will this mean for the organization?
My take is, not much. Here’s why:
1. The company will remain public, and the shareholders are the same. (Under the proposal, Cookson shareholders get one share in each of the two new companies.) Had this been an MBO or private equity group, I would expect slash and burn. But the transition as planned should bring much-desired stability to the new organization.
2. The upper management isn’t changing. Had Cookson Performance Materials group CEO Steve Corbett left, I might think differently. But Corbett, who joined Cookson in 1990 and has run Enthone since 2002 and both companies since 2004, is highly responsible for the existing management and operational structure. He knows what he is doing, knows the markets and understands the brands.
3. The debt is manageable. Alent (the new name of the former Cookson Performance Materials) will “get” about one-third of Cookson’s £451 million ($727 million) worth of debt. Given the new company’s sales of £418 million ($675 million) and profitability, it should be able to swallow that meatball.
4. The brands are intact. The Alpha Metals and Enthone brands are well-recognized and respected worldwide. Indeed, after spending some time trying to beef up the somewhat unwieldy Cookson Performance Materials name, the company reversed gears and has been working over the past year to rebuild those individual brand names. Perhaps this was in anticipation of the demerger, but either way, the strategy was well-timed.
In fact, the only casualty I see in all this is the Cookson name, which is, believe it or not, more than 300 years old. One wonders whether the Cookson name was seen as a negative by either of the spinoff companies.
And so goes Cookson. From its founding by Isaac Cookson in 1704 as a collection of metal and glass businesses to its aggregation of a herd of electronics assembly equipment and materials companies in the 1980s and 1990s to the respective divestitures of Speedline, then Polyclad and its Precious Metals business, Cookson has always been in a transition of some sort. It’s hard to believe, though, that this is its final move.