Specialty chemicals and performance materials company Cabot has entered into a definitive agreement to acquire Norit from Doughty Hanson & Co. Managers and Euroland Investments for $1.1bn.
The acquisition will enable Cabot to strengthen its specialty chemicals portfolio of activated carbons, which are used to cleanse smokestack emissions, purify water, de-colourise sugar and food products and improve the purity of pharmaceuticals.
Patrick Prevost, Cabot president and chief executive officer, said the acquisition supports the ongoing transformation of the company's portfolio to a higher margin, less cyclical, specialty chemicals focused company.
"The acquisition of Norit is a natural extension of our core R&D and applications development competencies," Prevost said.
Cabot will finance the deal with $200m in cash, $300m from an existing credit facility and about $600m from long-term debt.
The deal, which is expected to close by the end of 2012, requires the approval of US and German regulators and consultation with the Dutch works council.
Eduardo Cordeiro, Cabot chief financial officer, said Norit's differentiated products for high-end applications drive substantially higher margins relative to competition.
"Norit's fundamental business performance generates EBITDA margins in excess of 25% and we expect annual revenue growth in the range of ten percent to 12%," Cordeiro said. "We remain confident in our adjusted EPS target of $4.50 in 2014 from our base business, and the Norit acquisition will be incremental to that target."