Industrial acid producer Chemtrade Logistics Income Fund has signed a deal to buy pollution cleanup company Marsulex Inc. for about $419.5-million.
"The acquisition fits directly within our core competency of providing critical non-core services to various industries," Chemtrade president and chief executive Mark Davis said in a statement after markets closed Thursday.
"It diversifies our customer base and expands both our product portfolio and geographic mix."
The sale does not include Marsulex Environmental Technologies Corp.
Under the deal, Marsulex shareholders will have the option to receive either $13.80 a share in cash, or $10.50 in cash plus a share of Investis U.S. Inc. which will own Marsulex Environmental Technologies.
The deal has received the approval of the Marsulex board of directors.
"We believe this transaction provides the best alternative for Marsulex shareholders to receive attractive value and liquidity for their shares," said Marsulex CEO Laurie Tugman.
The deal will require approval by two-thirds of the votes cast at a Marsulex shareholder meeting.
Marsulex's largest shareholder, Birch Hill Equity Partners Management Inc., has agreed to vote its roughly 60 per cent stake in the company in favour of the deal.
Trading in Chemtrade and Marsulex shares were halted pending the announcement.
Chemtrade said it expects to find $10-million in annual savings when the two companies are combined through the elimination of management fees, salaries, duplicative public company costs and other costs.
To help pay for the deal, Chemtrade said it has signed a deal to raise $130-million in an equity financing.
Chemtrade will issue 9.56 million subscription receipts at a price of $13.60 per receipt, which will be exchanged for shares once the deal closes.
The underwriters have also been granted an over-allotment option for an additional 1.43 million receipts that would raise an additional 19.5 million.
Chemtrade has also signed a deal for a $380-million four-year term loan and an $80-million revolving credit facility that will replace its existing senior revolving credit facility.
Marsulex is a provider of industrial services and a producer of sulphur-based industrial and water treatment chemicals. Chemtrade is a supplier of sulphuric acid, liquid sulphur dioxide and sodium hydrosulphite, and a processor of spent acid.
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