2 years after the IPO on Wall Street, the public limited company SC goes back into the private sector | Business
One and done gives way to two and Skidoo in the case of one of South Carolina’s few publicly traded companies.
Diversey Holdings Ltd. is re-entering the private sector after a relatively brief and unconvincing Wall Street run that began in March 2021.
The Fort Mill-based provider of hygiene and infection control products announced last week that it had agreed to a $4.6 billion sale to specialty chemicals maker Solenis. The deal is expected to close by the end of the year.
“Upon completion of the transaction, Diversey’s shares will no longer be listed on any public market,” the companies said in a March 8 joint statement.
Shareholders will get $8.40, excluding Bain Capital Private Equity, which controls 73 percent of Diversey’s stock. The buyout shop firm agreed to take less cash in exchange for a stake in the combined deal.
Long-term investors are well under water, as are most buyers who have been on board since around mid-2022. The agreed acquisition price is 44 percent below Diversey’s market debut of $15 two years ago and 55 percent below its all-time high of $18.61 reached about three months later. The day before the Solenis acquisition was announced, the stock was trading at just under $6.
“This is a merger of two leading companies that is completely complementary,” Eric Foss, Diversey’s chairman, said in a written statement. “We believe the transaction will create significant value realization for our shareholders.”
The York County company is the first Palmetto State company to go through an old-fashioned IPO in more than seven years. Diversey raised approximately $692 million through the sale of 46.2 million shares on the Nasdaq for an overall valuation of approximately $4.1 billion.
“It’s a great day for Diversey,” CEO Paul Wieland told CNBC that day, channeling a catchphrase from former Gov. Nikki Haley.
The company joined a rather small association. The number of South Carolina-headquartered companies listed on a major stock exchange has fallen to 15 following the sale of Charleston’s Benefitfocus Inc. to New York City-based Voya Financial earlier this year. The Solenis deal will further thin the herd by one.
With 9,000 employees and 85,000 customers in 80 countries, Diversey is a relative newcomer to South Carolina but has been in business for nearly a century. It was founded in the 1920s as a subsidiary of an Illinois industrial cleaning company and was named by its founders after a street in Chicago. It has changed hands several times over the years, with previous owners ranging from consumer goods giant Unilever to Canadian beer maker Molson.
Until 2017, the company was part of a largely anonymous division within the Charlotte-based Sealed Air Corp. Bain Capital acquired the business for $3.2 billion this year, reviving the Diversey brand.
Months later, South Carolina offered tax breaks and other incentives to lure corporate headquarters and some 400 jobs across the border from Queen City and from Wisconsin to York County.
On the day of the IPO two years ago, Weiland said it was “a great time for us to go public.” Diversey wanted to dispel expectations that demand for hygiene and infection control products would increase as the global economy slowly recovers from the COVID-19 pandemic.
“We are gaining market share. We have a wide range of plans to increase our margins,” he said in the CNBC interview.
Also, Weiland added, the $32 billion personal care products industry is highly fragmented, making it fertile ground for mergers and acquisitions.
Two years later, Diversey has become an M&A target.
The expected upturn in business failed to materialize in the months following the IPO. Diversey’s 2021 revenue was flat at $2.6 billion, while net loss increased to $175 million from $38 million. The stock began slipping late in the year after the company raised another $214 million by selling more shares, and never found a foothold again, although the financial outlook appeared to be improving. Diversey’s latest report to investors showed that revenue rose 6 percent to $2 billion in the third quarter of last year, while the loss narrowed to $110 million from $139 million.
Weiland said the sale to Solenis “provides a unique opportunity to increase value and create a more diversified business with greater reach, broader global reach and superior customer service capabilities.”
The buyer is located in Wilmington, Del. and has been owned by Beverly Hills-based Platinum Equity since 2021. It operates 49 manufacturing facilities around the world – including a location in Savannah – and employs 6,500 people in 130 countries. It has no presence in South Carolina.
Solenis CEO John Panichella will helm the show once the deal closes, which is a holdup unless regulators make a fuss: Bain Capital has already agreed to vote its majority stake in Diversey for sale.
Comments are closed.