Stonepeak abandons Ixom purchase

Ixom is a distributor of water treatment chemicals.

Infrastructure investor Stonepeak is understood to have walked away from an acquisition of the chemicals business Ixom after suggestions earlier the pair were believed to be poised to agree a deal.

It has now been almost a year since Keppel Infrastructure first placed Ixom up for sale.

The sale process concluded at the end of last year without a transaction. Final bids were received in November.

Stonepeak was one of the contenders in the sale process, then it resumed talks with Keppel about an acquisition this year. However, changing market conditions were likely to have been a contributing factor for stalled negotiations.

In its quarterly update delivered this month, Keppel Infrastructure said that Ixom continued to deliver a strong performance, and it would revisit a strategic review of the business when the market improved.

Despite strong interest from a mix of financial and strategic investors, macro uncertainties made investors more cautious, Keppel said.

Pricing was affected by rising costs of funding, and the tightening of debt capital markets did not reflect the quality of Ixom’s business and strong cash generation profile, the Singapore-listed group said.

In the sale process last year, sources suggested that offers came in between $1.5bn and $2bn, but Keppel’s earlier price expectations were about $2bn amid booming market conditions. Keppel said Ixom continued to pursue value-enhancing opportunities such as growing core businesses through mergers and acquisitions, driving performance of new acquisitions, further streamlining of the business and leveraging Ixom’s strong financial performance to explore a debt recapitalisation strategy.

For the first quarter of the year, Ixom generated $21m in distributable income, up 8.4 per cent from the previous corresponding quarter.

It has a $105m revolving credit facility that matures in February next year.

Ixom is a manufacturer and distributor of water treatment chemicals, industrial and speciality chemicals in Australia and New Zealand.

It has more than 30,000 customers comprising municipals and blue-chip companies.

Keppel values its distribution and storage division, which includes Ixom and the Philippines’ largest petroleum products storage facility, Philippine Coastal, at $S1.464 ($1.6bn).

Keppel paid $1.1bn for Ixom in 2018 after Blackstone purchased it from Orica in 2014 for $750m.

The company was expected to generate $180m in earnings before interest, tax, depreciation and amortisation for the 2022 financial year.