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Apollo seals second deal in a week

The New York firm has agreed to take industrial company OM Group private in a $1bn transaction

Apollo Global Management has sallied forth with it second investment in a global business over the past week, agreeing to take publicly traded OM Group private.

The New York financial sponsor offered $34 per share for OM's stock in its latest deal, valuing the Cleveland, Ohio-based global specialty chemicals manufacturer at more than $1 billion. 

The transaction, which included a 35-day go-shop provision, was structured whereby OM is required to divest a couple of business units to publicly traded Platform Specialty Products for $365 million. If OM, however, accepts an offer from a rival bidder during the 35-day period, it would be required to pay Apollo a $36.5 million termination fee, according to Securities & Exchange Commission filings.

Scott Kleinman, lead partner of Apollo's private equity business, said in a statement the acquisition provides the firm with an “opportunity to acquire three leading businesses that are part of the OM Group portfolio in a transaction that highlights Apollo's deep expertise and long history of value creation in the chemicals and materials sciences businesses”.

OM's New York Stock Exchange-traded shares have traded at $21.87 each to $34.20 over the past year.

The deal follows an announcement by Denver-based global engineering services company CH2M on 27 May that Apollo agreed to invest $300 million in the company via a two-step transaction. The deal called for Apollo to invest $200 million in the company's convertible preferred shares, followed by an additional $100 million investment in the company within one year of the transaction's closing.

In connection with the OM Group deal, BNP Paribas is serving as financial advisor to OM, and Deutsche Bank Securities is providing financial advice to OM's board of directors. Jones Day is serving as legal counsel to OM Group.

Paul, Weiss, Rifkind, Wharton & Garrison is serving as legal advisor to Apollo, and Lazard and Credit Suisse are acting as financial advisors to the private equity group.