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8-K - FORM 8-K - KMG CHEMICALS INC | c98543e8vk.htm |
EX-10.48 - EXHIBIT 10.48 - KMG CHEMICALS INC | c98543exv10w48.htm |
EX-10.47 - EXHIBIT 10.47 - KMG CHEMICALS INC | c98543exv10w47.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
KMG CHEMICALS COMPLETES ACQUISITION OF
ELECTRONIC CHEMICALS BUSINESS
ELECTRONIC CHEMICALS BUSINESS
HOUSTON, TX March 30, 2010 KMG Chemicals, Inc. (NASDAQ: KMGB), a global provider of specialty
chemicals in carefully focused markets, today announced that it has completed the acquisition of
General Chemicals electronic chemicals business for $25.7 million in cash plus approximately
$850,000 of liabilities. The $25.7 million cash payment included $7.2 million for inventory, which
was purchased at book value.
Neal Butler, President and CEO of KMG, commented, We are very pleased to incorporate this
profitable business into our existing Electronic Chemicals platform. We believe that this
transaction, our eighth acquisition in seven years, is an ideal fit for our Electronic Chemicals
line of products, and that the consolidation of the two operations will expand both our scope and
scale in the wet process chemicals market and enhance our ability to meet customer needs. It will
also produce substantial operational synergies. While we anticipate the acquisition to be mildly
dilutive to earnings in the second half of fiscal 2010 due primarily to closing and integration
expenses, even with this minor dilution, we are anticipating solid results and another year of
record earnings in fiscal 2010. Starting in fiscal 2011 and continuing into the following year, we
expect this acquisition to be significantly and progressively accretive to earnings. The acquired
business generated revenues of approximately $59.4 million and $42.7 million in the calendar years
2008 and 2009, respectively.
The transaction was structured as an asset purchase and includes a purification and processing
facility for solvents used in the electronic chemicals business located in Hollister, California,
along with its personnel. KMG currently has a significant volume of solvent-based products being
toll manufactured by a third party under an agreement that expires at the end of calendar 2010. At
that time, the Company will consolidate those volumes into the Hollister plant, greatly improving
the utilization rate of that plant.
Also included in the acquisition is equipment used in the production of electronic chemicals at
General Chemicals Bay Point, CA facility; however, the real estate and employees will remain with
General Chemical. General Chemical will provide contract manufacturing services to KMG for certain
acid products at that facility under a long-term agreement.
The Company had available cash of approximately $10.0 million at closing. It financed the
transaction with a portion of that cash on hand and borrowings on its revolving credit facility
that was recently expanded from $35.0 million to $50.0 million. The Company expects to pay down a
significant portion of these borrowings from cash flow from operations over the next 18 months.
KMG News Release
Mr. Butler went on to say, With this transaction, our Electronic Chemicals business will have over
a 50% share of the U.S. market for high purity acids, bases, etchants, and other custom formulated
cleaning chemistries serving the semiconductor industry. Besides increased market presence, this
transaction will also result in higher capacity utilization rates at both of our U.S. based plants.
This process is expected to be completed in the second half of next fiscal year. This
acquisition also provides a more meaningful position to KMG in the Asian market. We see
opportunity for further growth in this business in North America, Europe, and in Asia.
About KMG
KMG Chemicals, Inc., through its subsidiaries, produces and distributes specialty chemicals to carefully focused markets. The Company grows by acquiring and optimizing stable chemical product lines and businesses with established production processes. Its current operations are focused on the electronic, wood treatment, and agricultural chemical markets. For more information, visit the Companys web site at www.kmgchemicals.com.
KMG Chemicals, Inc., through its subsidiaries, produces and distributes specialty chemicals to carefully focused markets. The Company grows by acquiring and optimizing stable chemical product lines and businesses with established production processes. Its current operations are focused on the electronic, wood treatment, and agricultural chemical markets. For more information, visit the Companys web site at www.kmgchemicals.com.
The information in this news release includes certain forward-looking statements that are based
upon assumptions that in the future may prove not to have been accurate and are subject to
significant risks and uncertainties, including statements as to the future performance of the
company. Although the company believes that the expectations reflected in its forward-looking
statements are reasonable, it can give no assurance that such expectations or any of its
forward-looking statements will prove to be correct. Factors that could cause results to differ
include, but are not limited to, successful performance of internal plans, product development
acceptance, the impact of competitive services and pricing and general economic risks and
uncertainties.
Contacts:
John V. Sobchak
Chief Financial Officer
KMG Chemicals, Inc.
713-600-3814
jsobchak@kmgchemicals.com
www.kmgchemicals.com
Chief Financial Officer
KMG Chemicals, Inc.
713-600-3814
jsobchak@kmgchemicals.com
www.kmgchemicals.com
Investor Relations Counsel:
The Equity Group Inc.
Linda Latman
212-836-9609
LLatman@equityny.com
The Equity Group Inc.
Linda Latman
212-836-9609
LLatman@equityny.com
Melissa Dixon
212-836-9613
MDixon@equityny.com
www.theequitygroup.com
212-836-9613
MDixon@equityny.com
www.theequitygroup.com
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