Quaker Chemical and Houghton International have combined to create Quaker Houghton, a global leader in industrial process fluids to the primary metals and metalworking markets.
Along with the new name, the company revealed a new logo and brand representing the combined companies. The company will continue to be listed on the New York Stock Exchange and trade under the “KWR” ticker symbol.
The combined $1.6 billion revenue company employs 4,000 associates serving 15,000 customers worldwide. Quaker was founded in 1918 and Houghton in 1865.
“We are rooted in companies commonly acknowledged as authorities in industrial fluids and valued experts in customer processes,” said Michael F. Barry, chairman, chief executive officer, and president of the new company.
“Our similar cultures and values, combined with the talent and resources we bring to Quaker Houghton, create exciting opportunities to deliver innovative solutions that will help our customers’ operations run even more efficiently and effectively.”
The company’s combined breadth of product and service offerings can be found in end-markets such as aerospace, aluminum, automotive, machinery, can manufacturing, industrial parts manufacturing, mining, offshore, steel, and tube and pipe industries.
The combination of Quaker Chemical and Houghton International nearly doubles the size of either company with trailing 12 month revenue as of June 30, 2019 of $1.6 billion.
The company also expects to continue to grow through acquisitions which remain part of its core growth strategy. In the short term, the company will focus on paying down debt, but will continue to consider smaller acquisitions that can create value. Both Quaker and Houghton have long histories of building value through acquisitions.
The final purchase consideration at closing of the combination was comprised of: 1) approximately $170.8 million in cash; 2) the issuance of approximately 4.3 million shares of common stock to the Hinduja Group and other former owners of Houghton International, comprising 24.5% of the stock of the combined company; and 3) the refinancing of approximately $660 million of Houghton net indebtedness. This purchase consideration does not reflect the cash proceeds from the required divestiture which is discussed below.
To fund the purchase, the company borrowed a total of $930 million at close under its new $1.15 billion credit facility as follows: 1) $600 million U.S. dollar term loan; 2) $150 million (equivalent) euro term loan; and 3) $180 million revolving credit borrowing. The term loans and the multi-currency revolving credit facility each have a five-year maturity, and the revolving credit facility has remaining availability of approximately $220 million for additional liquidity. According to a related 8-K filing, Bank of America served as administrative agent, swing line lender and l/c issuer for the transaction. Wells Fargo Securities served as joint lead arranger. Other members of the bank group included Citizens Bank, Deutsche Bank, JP Morgan, Wells Fargo Bank, PNC Bank and PNC Capital Markets.
