Koppers Inc., a wholly-owned subsidiary of Koppers Holdings, signed an agreement to acquire, and expects to fully close at the end of business today, the acquisition of the Industrial division of Cox Industries, Inc. for approximately $200 million in cash. Cox Industrial will be renamed as the Utility and Industrial Products unit of Koppers, as the company says in the press release received by Lesprom Network.
The agreement to acquire Cox Industrial has been structured as an acquisition of stock with a mutual 338(h)(10) election, resulting in approximately $24 million of net present value tax benefits to Koppers. Additionally, Koppers expects that the combined company will achieve total synergies of at least $5 million on an annualized basis from overhead cost savings as well as incremental sales opportunities for the company's Performance Chemicals, and Carbon Materials and Chemicals businesses through vertically integrated supply relationships. Koppers expects the acquisition to be accretive to earnings per share in 2018.
Koppers is financing the acquisition through existing bank debt, and expects to enter into a new secured term loan facility, added to the company's existing $600 million revolving credit facility, immediately after the closing of the transaction.
The new secured term loan facility will include a secured term loan of $100 million with a quarterly amortization of $2.5 million and a five-year maturity. The initial average borrowing rates under the new facilities are expected to be approximately five percent.
Cox Industrial manufactures and distributes power distribution and transmission poles, pilings and related products to investor-owned utilities, electric cooperatives, municipalities and other entities.