Materion To Acquire HCS-Electronic Materials For $380 Mln In All Share Transaction

(RTTNews) - Ohio-headquartered Materion Corporation (MTRN), a provider of high-performance engineered materials, on Monday announced that it has inked a deal to acquire Newton-based privately held H.C. Starck Solutions' electronic materials portfolio, HCS-Electronic Materials, for $380 million in an all-share transaction, which is expected to close in the fourth quarter of 2021. Materion expects to finance the deal by utilizing a new term loan, along with borrowings from its revolving credit agreement.

With the latest acquisition, Materion expects to generate strong cash flow and deploy it towards deleveraging to the middle of the range within 24 months post-close, the company said in a statement. HCS-Electronic Materials is expected to generate revenue of about $145 million in 2021, adding over 19 percent in value-added sales, and adjusted EBITDA of approximately $29 million, representing an adjusted EBITDA margin of around 20 percent.

The addition is expected to be immediately accretive to Materion's adjusted EBITDA margin by 100 basis points. The purchase price reflects about 13x estimated 2021 adjusted EBITDA multiple before synergies, and an approximate 10x estimated adjusted EBITDA multiple including projected run-rate synergies. The deal is expected to be immediately accretive to Materion's adjusted earnings per share and adjusted EBITDA margins by 100 basis points, and to increase annual value-added sales by over 19 percent; in addition, the company expects synergies to meaningfully contribute to EBITDA; targeting approximately $10 million by 2026.

Upon completion of the deal, HCS-Electronic Materials will be part of Materion's Advanced Materials segment.

J.P. Morgan is serving as exclusive financial advisor and Jones Day as legal counsel to Materion.