Zep Posts Q2 Profit; Agrees To Be Acquired By New Mountain In $692 Mln Deal

(RTTNews) - Zep Inc. (ZEP), consumable chemical packaged goods company that manufactures a wide variety of high-performance maintenance and cleaning chemicals, reported that its net income was $162 thousand or $0.01 per share, compared to a loss of $682 thousand or $0.03 per share in the same quarter last year.

Adjusted earnings per share dropped to $0.01 from $0.10 in the prior year. Adjusted cash earnings per share also declined $0.10 from $0.19 last year.

Net sales, on a comparable basis, grew 3.8% in the second fiscal quarter to $160.1 million as a result of increases in both volume and price.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.06 per share and revenues of $159.87 million for the quarter. Analysts' estimates typically exclude special items.

Fiscal 2015 gross profit margins are expected to be between 46%-48% of net sales.

Separately, Zep and New Mountain Capital, private equity firm, announced that they have entered into a definitive merger agreement by which a fund managed by New Mountain Capital, L.L.C. will acquire all outstanding shares of Zep common stock for $20.05 per share in cash. The transaction is valued at approximately $692 million, including net debt.

The purchase price represents a 23% premium to Zep Inc.'s 90-day volume weighted average stock price for the period ended April 7, 2015. The agreement was unanimously approved by Zep Inc.'s Board of Directors.

The acquisition is subject to customary closing conditions, including receipt of stockholder and regulatory approvals.

The definitive agreement also contains a go-shop provision under which Zep Inc. may solicit alternative proposals from third parties during the next 30 calendar days on customary terms and conditions for transactions of this nature.

The Zep Board has the right to actively solicit acquisition proposals during this period. The acquisition requires the affirmative vote of holders of a majority of the outstanding shares of the Zep common stock, which will be sought at a special meeting of shareholders.

The transaction is currently expected to close in the third calendar quarter of 2015.