W.R. Grace & Co. (Columbia, Md.; www.grace.com) has announced that its Board of Directors has approved a plan to separate into two independent, publicly traded companies. The two companies, to be named prior to closing, will be “New Grace,” comprised of Grace’s Catalysts Technologies and Materials Technologies business segments (excluding the Darex packaging business), and “New GCP,” comprised of Grace’s Construction Products business segment and the Darex packaging business. The separation transaction is intended to be a tax-free spin-off to Grace shareholders for U.S. federal income tax purposes, and is expected to be completed in approximately 12 months.
“Grace has created significant shareholder value by focusing on our customers, driving innovation and growth, and executing a disciplined capital allocation strategy,” said Fred Festa, Grace chairman and chief executive officer. “Our Board and management team continuously evaluate strategic options to create value and, after a comprehensive review, determined that this separation is in the best interest of the Company and our shareholders. The time is right to create two strong, independent companies that will benefit from improved strategic focus, simplified operating structures, and more efficient capital allocation.”
“We have a world class team of talented people who have worked hard to transform Grace into a high performing company. Those efforts allow us to take this next important step in our evolution,” continued Festa. “We’re confident that both teams will maintain the customer focus and commitment to growth and value creation that have been keys to our success.”
After the separation, New Grace will consist of the company’s existing Catalysts Technologies business and its Materials Technologies business (excluding the Darex packaging business). The company expects New Grace to continue to be a global leader in process catalysts and specialty silicas. New Grace will be a high margin, technologically advanced business focused on growth, margin expansion and strong cash flow. With its materials science expertise and complex manufacturing capabilities, New Grace will continue to deliver high-value, differentiated technologies to maintain its global leadership positions and drive additional growth and margin expansion. The business will remain differentiated by best in class manufacturing, technical sales and service and R&D.
Post separation, the company expects New Grace to have sales of approximately $1.8 billion. The company believes that New Grace will seek to make strategic bolt-on acquisitions in its core segments as well as acquisitions to expand its high margin, high-performance specialty chemicals and performance materials portfolio.
New GCP is expected to continue to be a leader in cement and concrete chemicals, specialty building materials and can sealants and coatings with strong brands and positions. New GCP will aim to leverage its independent company platform and strong free cash flow to accelerate growth in its global construction products segments and to maintain its segment leadership positions in can sealants and coatings. New GCP will have the financial flexibility to grow both organically and through acquisitions in its construction products business.
Upon completion of the transaction, New Grace will continue to be led by Fred Festa, chairman and chief executive officer, and Hudson La Force, senior vice president and chief financial officer.
Greg Poling, currently president and chief operating officer of Grace, will lead New GCP as president and chief executive officer.