Acquisition adds a high quality business with significant potential for further growth in the attractive personal care segment.

Elementis plc (“Elementis” or the “Group”) today announces that it has entered into an agreement to acquire SRLH Holdings, Inc. (“SummitReheis”) from an affiliate of One Rock Capital Partners, LLC (“One Rock”) for an enterprise value of US$360 million, (the “Acquisition”). SummitReheis will become part of an enlarged personal care business within Elementis. For the year ended 31 December 2016, SummitReheis is expected to report revenue of US$134 million and underlying EBITDA of approximately US$28 million. The acquisition enterprise value is equivalent to approximately 11.8x

Transaction highlights:
— Acquisition creates an enlarged personal care business with annual sales of approximately US$200 million, significantly increasing the Group’s presence in this important end market
— Enhanced growth potential driven by the combination of complementary products, customers and a broader geographic presence which together offer cross-selling opportunities
— Critical components for the US$13 billion anti-perspirant market with growth driven by increasing penetration in emerging markets and demand for premium and higher efficacy products in established geographies
— Acquisition will be funded from cash resources and new debt facilities of US$475 million which will be supported by the cash generation characteristics of the enlarged Group
— Expected to deliver material earnings accretion and substantial free cash flow accretion in the current financial year
— Return on invested capital (“ROIC”) expected to be in line with Elementis’ cost of capital in the first full year of ownership

SummitReheis is a leading global specialty chemicals platform that produces a range of critical active ingredients and materials tailored for use in personal care, pharmaceutical and dental products. The company was founded in 1940 and is headquartered in Huguenot, New York, US.

— SummitReheis’ AP actives business is the global leader in the production of active ingredients in anti- perspirant products and accounted for 62% of SummitReheis’ pro forma revenue for the year ended 31 December 2015

Anti-perspirants reduce sweat by a significant amount and deodorants use biocides and scent to mask the effects of sweating. SummitReheis’ AP active ingredients are based on either ACH (Aluminium Chlorohydrate) or ZAG (Zirconium Aluminium Glycine). They are used in all of the key types of anti-perspirant products: sticks, roll-ons and aerosols. In the US the preferred anti-perspirants are sticks whilst in Europe they are aerosols. ACH and ZAG are used in most products however ZAG is not used in aerosols.

Elementis’ hectorite clays or gels are used in anti-perspirants in conjunction with SummitReheis’ products. Specifically, the hectorite clays enable the effective use of ACH in aerosols, the highest growth application. Hectorite acts as a rheology modifier, providing uniformity in application and aiding in the suspension of aluminium salts within aerosol anti-perspirants. As well as acting as an in-process suspension aid, the use of hectorite also reduces the undesirable appearance of armpit staining on shirts.

SummitReheis has strong and long-standing relationships with the top global manufacturers of anti-perspirants and deodorants. The AP actives business serves a broad customer base from small, regional suppliers to some of the leading global personal care manufacturers

Paul Waterman, CEO of Elementis plc, said:
“At our recent Capital Markets Day presentation, we highlighted the growth prospects in personal care as a key opportunity for Elementis, driven by long term positive demographic trends and an increasingly sophisticated consumer. Our leading position with proprietary hectorite and Rheoluxe® rheology modifiers will be augmented by SummitReheis’ complementary position in specialty additives for anti-perspirants, pharmaceuticals and dental products.

“The Group is well positioned to capitalise on this acquisition through the enhanced geographic footprint and strong customer relationships that it brings. Together with our existing business, the acquisition of SummitReheis is transformative for our personal care business, creating a substantial, high return platform that will help accelerate our Reignite Growth strategy.”

Strategic rationale

— Personal care market is a significant growth opportunity for Elementis
— Anti-perspirants is a highly attractive, growing segment of the personal care market
— Acquisition creates a ~US$200 million personal care business of Elementis with critical mass and significant growth prospects
o Combines SummitReheis’ key active ingredients for anti-perspirants with Elementis’ enabling technology of hectorites and synthetic polymers
— Accelerates growth for both SummitReheis and Elementis as a result of the expanded footprint with key customers and broader geographical reach

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