15 November 2024
Regional conglomerate ANSA McAL has completed its largest acquisition in its 143-year history, purchasing US-based chlor-alkali producer Bleachtech LLC for US$327mn.
The acquisition, finalised through ANSA’s subsidiary ANSA Chemicals US LLC, marks a significant step in the group’s ambition to expand its market presence and achieve its “2X” growth strategy of doubling profits by 2027.
Bleachtech operates two plants in Seville, Ohio, and Petersburg, Virginia, producing sodium hypochlorite (bleach), sodium hydroxide (caustic soda), and hydrochloric acid. These chemicals are essential in water treatment and sanitation.
“This acquisition is hugely transformational for ANSA McAL,” said Group CEO Anthony N. Sabga III. “We have well publicised our goal to double the size, scale and impact of the group by 2027. This acquisition will add a substantially incremental component to our business. This allows us to now, for all intent and purposes, to be the main supplier of chlor-alkali treatment for two major states in the US,” he added.
The purchase was funded through a mix of debt and equity, with approximately 60% of the cost financed via loans and 40% by cash. The debt, totaling US$200mn, comprised a five-year syndicated term loan of US$190mn arranged by Citibank NA, and a sellers’ promissory note of US$10mn and were completed on 1 November 2024.
The loan carries a floating interest rate based on the three-month Secured Overnight Financing Rate (SOFR), currently at 4.57%, plus a 3.75% margin, for a total initial rate of 8.32%. A T&T Stock Exchange disclosure noted that It is secured by the newly acquired US assets of BleachTech and guranteed by the group and two of its subsidiaries, ANSA McAL Chemicals and ANSA McAL Chemicals Holdings.
The cash portion of the acquisition, amounting to approximately US$127mn, was funded through a mix of ANSA McAL’s treasury reserves and the liquidation of significant US-dollar investments, said Sabga in a Business Guardian interview.
“The acquisition price was based on a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortisation) that we believe reflected fair value for the business,” said Sabga of Bleachtech, which generated US$85.7mn and US$57.4mn in revenues and EBITDA in 2023, respectively.
The transaction faced delays due to the need for regulatory approvals from the US Federal Trade Commission and the Committee on Foreign Investment in the USA. This heightened scrutiny arose from the classification of chlor-alkali production as critical infrastructure in the US, given its essential role in producing potable water.
The company, which was acquired debt-free with some working capital on its books, has two plants currently operating at 50% capacity, producing between 32mn and 37mn gallons annually. The plants have the potential to double production, creating opportunities for further profitability. “We feel that we can definitely seek to acquire more markets and also additional uses for that volume,”said Sabga.
“My priority over the next few months will be to meet with relevant stakeholders to share our growth plans and commitment to working with Bleachtech’s talented team. The purification and disinfection end use of Bleachtech’s products is very much in line with our group’s environmental commitments,” said the Group CEO, adding that “it is also aligned to Trinidad and Tobago’s national objective to diversify the economy both from an industry and geographic perspective”.
Bleachtech’s former owner, Richard Immerman, expressed optimism about the future under ANSA McAL’s leadership. “We are excited that Bleachtech is joining the ANSA McAL group. I have been impressed with the care, professionalism, and rigour ANSA McAL brought to this process. Their intention to invest and grow this business is good news for all of us who helped build, and work for, Bleachtech, as well as for our suppliers and customers,” Immerman said.
“Our focus now remains the continued safe operations of the plants while we explore ways to build out demand to utilise spare plant capacity,” said Andy Mahadeo, ANSA McAL’s Chemicals Sector Head.
While not explicitly mentioned, there is speculation that safety is a priority for ANSA given that a major chemical leak occurred at BleachTech’s Seville plant in January 2024, injuring two workers. The company was later cited and fined by the Occupational Safety and Health Administration.
Notwithstanding this seemingly isolated incident, the acquisition represents a milestone in ANSA McAL’s history, reinforcing its position as a global player in the chemicals industry. With a strong EBITDA margin of 67% in 2023, Bleachtech is poised to deliver significant returns, even as the group works to expand production and market reach.