Ingevity to acquire Georgia-Pacific’s pine chemicals business

NORTH CHARLESTON, S.C.–(BUSINESS WIRE)–$NGVT–Ingevity Corporation (NYSE: NGVT) today announced it has reached an
agreement with Georgia-Pacific to acquire Georgia-Pacific’s pine
chemicals business for a cash purchase price of $315 million. The
acquisition is subject to certain regulatory approvals and other
customary closing conditions, and Ingevity expects to close on the
transaction in late 2017.

Georgia-Pacific’s pine chemicals business manufactures and sells
pine-based tall oil fatty acids, tall oil rosin, and tall oil rosin
esters used in adhesives, cleaners, paints and other coatings, inks,
metalworking, mining, oilfield, packaging and rubber processing.
Approximately 90 percent of its revenues are in North America. The
business manufactures the majority of its products at a Georgia-Pacific
site in Crossett, Ark., and employs approximately 70 people.

In purchasing the pine chemicals business, Ingevity will acquire the
pine chemicals-related assets at the Crossett plant, saleable inventory,
customer lists and the book of business, as well as various patents and
trade names associated with acquired product lines.

Separately, Ingevity will enter into a 20-year, market-based crude tall
oil (CTO) supply contract with certain of Georgia-Pacific’s paper mill
operations.

Ingevity will not acquire Georgia-Pacific’s merchant CTO or crude
sulfate turpentine business which will be retained and operated by
Georgia-Pacific.

The company will host a 30-minute conference call on Wednesday, August
23, at 8:30 a.m. (Eastern Time) to discuss the transaction. Those who
wish to participate in this event should dial 800-230-1059 (inside the
U.S.) or 612-234-9959 (outside the U.S.), at least 15 minutes prior to
the start of the call. In addition, a slide deck for use during the
conference call has been posted on the investors section of Ingevity’s
website. Replays will be available through September 23, 2017, and can
be accessed at 800-475-6701 (inside the U.S.) or 320-365-3844 (outside
the U.S.), with access code 429003.

“Ingevity’s and Georgia-Pacific’s pine chemicals businesses are very
complementary,” said Michael Wilson, Ingevity president and CEO. “By
combining the companies, we will have a stronger, more competitive pine
chemicals business. Our Performance Chemicals segment has recently shown
improvement. This acquisition will provide a stronger platform from
which we will accelerate profitable growth.”

Wilson stated that the acquisition would be accretive to earnings in the
first year following closing and that the company expects to derive
approximately $11 million in net synergies as a result of the
acquisition, most of which would be a result of manufacturing
optimization among the combined three chemicals plants and lower
transportation and logistics costs.

“The combination of Georgia-Pacific’s pine chemicals business and
Ingevity will enhance our ability to provide innovative technologies,
high-quality products and superior customer service,” said Wilson. “We
are committed to ensuring that customers continue to receive excellent
products and services while we jointly work through the integration
process.”

The company will fund this transaction through an amendment and
extension of its bank credit facility. The amended and extended
facility, which closed earlier this week, was led by Wells Fargo
Securities, LLC; J.P. Morgan Securities LLC; and Merrill Lynch, Pierce,
Fenner & Smith and is comprised of a $550 million revolving credit
facility and a $375 million term loan. The $925 million facility matures
in May 2022 and includes 13 participating banks.

Citi acted as exclusive financial advisor and Kirkland & Ellis LLP acted
as legal counsel to Ingevity.

Ingevity: Purify, Protect and Enhance

Ingevity provides specialty chemicals and high-performance carbon
materials and technologies that help customers solve complex problems.
These products are used in a variety of demanding applications,
including asphalt paving, oil exploration and production, agrochemicals,
adhesives, lubricants, printing inks and automotive components that
reduce gasoline vapor emissions. Through a team of talented and
experienced people, Ingevity develops, manufactures and brings to market
products and processes that purify, protect and enhance the world around
us. Headquartered in North Charleston, S.C., Ingevity operates from 25
locations around the world and employs approximately 1,500 people. The
company is traded on the New York Stock Exchange (NYSE: NGVT). For more
information, visit www.ingevity.com.

Forward-Looking Statements

This news release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward looking statements generally include the words “may,” “could,”
“should,” “believes,” “plans,” “intends,” “targets,” “will,” “expects,”
“suggests,” “anticipates,” “outlook,” “continues,” “forecast,”
“prospect,” “potential” or similar expressions. Forward-looking
statements may include, without limitation, expected financial
positions, results of operations and cash flows; financing plans;
business strategies and expectations; operating plans; synergies and the
potential benefits of the acquisition of Georgia-Pacific’s pine
chemicals business; the anticipated timing of the closing of the
acquisition; capital and other expenditures; competitive positions;
growth opportunities for existing products; benefits from new technology
and cost-reduction initiatives, plans and objectives; and markets for
securities. Like other businesses, Ingevity is subject to risks and
uncertainties that could cause its actual results to differ materially
from its expectations or that could cause other forward-looking
statements to prove incorrect. Factors that could cause actual results
to materially differ from those contained in the forward-looking
statements, or that could cause other forward-looking statements to
prove incorrect, include, without limitation, risks related to the
satisfaction of the conditions to closing the acquisition (including the
failure to obtain necessary regulatory approvals) in the anticipated
timeframe or at all; risks that the expected benefits from the proposed
acquisition will not be realized or will not be realized within the
expected time period; the risk that the businesses will not be
integrated successfully; significant transaction costs; unknown or
understated liabilities; general economic and financial conditions;
international sales and operations; currency exchange rates and currency
devaluation; compliance with U.S. and foreign regulations; attracting
and retaining key personnel; conditions in the automotive market or
adoption of alternative technologies; worldwide air quality standards;
government infrastructure spending; declining volumes in the printing
inks market; the limited supply of crude tall oil (“CTO”); lack of
access to sufficient CTO; access to and pricing of raw materials;
competition from producers of substitute products and new technologies;
a prolonged period of low energy prices; the provision of services by
third parties at several facilities; natural disasters, such as
hurricanes, winter or tropical storms, earthquakes, floods, fires; other
unanticipated problems such as labor difficulties including renewal of
collective bargaining agreements, equipment failure or unscheduled
maintenance and repair; protection of intellectual property and
proprietary information; information technology security risks;
government policies and regulations, including, but not limited to,
those affecting the environment, climate change, tax policies and the
chemicals industry; and lawsuits arising out of environmental damage or
personal injuries associated with chemical or other manufacturing
processes. These and other important factors that could cause actual
results or events to differ materially from those expressed in
forward-looking statements that may have been made in this document are
and will be more particularly described in our filings with the U.S.
Securities and Exchange Commission, including our Form 10-K for the year
ended December 31, 2016 and our other periodic filings. Readers are
cautioned not to place undue reliance on Ingevity’s projections and
forward-looking statements, which speak only as the date thereof.
Ingevity undertakes no obligation to publicly release any revision to
the projections and forward-looking statements contained in this
presentation, or to update them to reflect events or circumstances
occurring after the date of this release.

Contacts

Ingevity Corporation
Laura Woodcock, 843-746-8197
[email protected]
or
Investors:
Dan
Gallagher, 843-740-2126
[email protected]