DuPont will acquire Rogers in a strategic deal to further its vision to focus on “market-leading high-growth, high-margin businesses with complementary technology and financial characteristics,” in an effort to revamp and refocus the company.
Materials solutions corporation DuPont de Nemours, Inc. (NYSE: DD) is set to acquire engineered materials and components company Rogers Corporation (NYSE: ROG) in a $5.2 billion all cash deal as part of strategic move to expand into electric vehicles and automotive technology, such as advanced driver assistance systems, while boosting its position in other sectors like clean energy and 5G telecommunications.
Pursuant to the Nov. 2 deal, Rogers shareholders will receive $227 in cash per share, which as noted in the press release is a “33% premium over Rogers closing share price on November 1, 2021, and a 46% premium to the 1-month volume weighted average share price.”
Upon closing, Rogers will become part of DuPont’s Electronics & Industrial business unit. According to the filing, this is a strategic deal for DuPont who gains Rogers’ “significant applications engineering, design expertise, and deep customer relationships” to help strengthen DuPont’s position.
“Rogers is a recognized global leader in advanced materials solutions, and this combination with DuPont will help accelerate our long-term growth in EV/HEV, ADAS and other key markets,” Bruce D. Hoechner, President and CEO of Rogers said in the press release.
“Rogers is a results-driven organization with excellent technical expertise and deep customer relationships that align well with DuPont[’]s leading innovation and applied material science capabilities,” Ed Breen, DuPont Executive Chairman and CEO said in the press release. “The combination of Rogers with our Electronics & Industrial business further strengthens our market-leading portfolio and ability to bring new solutions to exciting end markets.”
Some of Rogers products include “high-frequency circuit materials, ceramic substrates for power semiconductor devices, and high-performance foams,” according to the filings. Meanwhile, DuPont is in three main business areas – electronics and industrial; mobility and materials; and water and protection.
DuPont also announced that it will sell most of its Mobility and Materials unit making polymers and resins for vehicles, with product lines including Zytel, Delrin, Hytrel, among others, representing about $4.2 billion in revenue and $1 billion of operating EBITDA based on 2021 full year estimates. According to Breen, “we are sharpening our focus on high-growth, high-value opportunities in sectors with steady long-term secular growth trends where our global innovation leadership enables a competitive advantage.”
As a result, both transactions will expand DuPont’s reach in the key “high-growth, high-margin markets” of “electronics, water, protection, industrial technologies and next generation automotive,” while accelerating its top-line growth, supporting operating EBITDA margins and improving stable earnings.
The reverse triangular merger with Rogers is expected to close in Q2 2022, subject to customary closing conditions and the approval of regulators and Rogers shareholders.
Rogers is represented by Covington & Burling LLP and Hinckley, Allen & Snyder LLP served as outside counsel. J.P. Morgan Securities LLC was the financial advisor to Rogers.
DuPont is represented by Skadden, Arps, Slate, Meagher & Flom LLP. Evercore is Dupont’s lead financial advisor, while Goldman Sachs & Co. LLC is serving as financial advisor and providing the fully committed financing.
DuPont previously acquired Laird Performance Materials for $2.3 billion in a deal announced in March 2021 and closed in July. The addition of Rogers will help to engrain DuPont’s position as an electronic solutions provider. Between both acquisitions, by the end of 2023 Dupont anticipates $115 million in pre-tax run-rate cost savings.
DuPont expects the deal to be accretive to its top-line, operating EBITDA, free cash flow and adjusted EPS once closed. DuPont stated that it has committed financing and plans on using a large portion of the sale of the Mobility & Materials segment to repay the acquisition financing for Rogers and help with growth opportunities.