The deal announced on Monday consists of $3.29 in cash and 0.305 Univar shares, with an implied value of $11.65 per Nexeo share, which represents a premium of 16.4 percent to the stock’s last closing price.
Nexeo’s shares were up 15 percent at $11.51, while Univar was up marginally at $27.75 in extended trading.
Including debt, the deal was valued at about $2 billion, the companies said.
Univar will evaluate alternatives for Nexeo’s plastics business, including a divestiture. The business accounted for half of Nexeo’s total revenue in 2017.
Univar said the Nexeo transaction would add to its earnings and cash flow in the first full year and generate $100 million of annual cost savings by the third year following the deal, expected to close in the first half of 2019.
“Together, we will drive growth and shareholder value with the largest North American sales force in chemical and ingredients distribution, the broadest product offering, and most efficient supply chain network in the industry,” Univar Chief Executive Officer David Jukes said in a statement.
Univar expects to fund the deal with a combination of available cash and bank financing, the company said.
Goldman Sachs and Co is Univar’s financial adviser, while Moelis & Co is advising Nexeo.
Reporting by Shanti S Nair and Arunima Banerjee in Bengaluru