Umeco agrees to takeover by Cytec Industries

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Umeco, the UK firm which produces composite materials for the bodywork of Formula One cars, has agreed to a takeover by US chemicals group Cytec Industries.

The proposed deal will see Cytec paying 550p per share of the business, which according to the offer document values Umeco at around £274m and is a 46% premium to the latter's closing price prior to the deal being announced last week.

As well as its materials going into F1 cars, Umeco supplies advanced composites for the aerospace, defence, wind energy, recreation and automotive sectors.

Shane Fleming, chairman, president and chief executive of Cytec, said the deal “greatly improves our presence in the industrial sector, where we see tremendous potential for significant value creation in applications like automotive, as customers seek to reduce weight and CO² emissions”.

Neil Johnson, Umeco’s non-executive chairman, said the board believed that Cytec’s 550p-a-share offer was “an attractive price for Umeco shareholders, and represents a valuation that reflects the future growth potential of Umeco while providing certainty, in cash, to [its] shareholders”.

In the offer document Cytec said it “attaches great importance to the skills, experience and knowledge of the existing management and employees of the Umeco Group, who have contributed to [its] success to date”.

However it added that while no detailed analysis had yet been done “nor any firm opinions formed, the process of integration will likely include the closure of Umeco’s head office in the UK and may (subject to any applicable consultation process) result in a marginal reduction of headcount of Umeco” when the business was combined with Cytec.

Cytec said its intended that the enlarged group would “seek to maintain an appropriately-sized employee base in order to execute its growth plans whilst seeking to avoid unnecessary overlap with Cytec’s existing activities”.

According to Umeco’s latest annual report and accounts it employed nearly 570 staff worldwide last year.