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Solenis acquires Diversey for $4.6 billion

Updated: Oct 30, 2023

Acquisition Overview

Chemicals company Solenis has completed a transaction to acquire Diversey in an all-cash transaction valued at $4.6 billion. The aim of the transaction is for Diversey to become a private company again; in 2017, Bain Capital invested in Diversey and took the company to the stock market.

Diversey is a global company that produces and supplies disinfectants, cleaning and hygiene products for both personal and professional use. They have a long history of implementing innovative cleaning technologies, and their products are widely used in a range of settings including healthcare facilities and food service operations. On the other hand, Solenis is a global speciality chemical supplier that offers a broad range of products and services to a variety of industries, including paper and packaging, industrial and municipal water treatment, and oil and gas. Their products include process chemicals, functional additives, and monitoring and control systems.

Thus, consolidating their positions as speciality chemical providers in the water treatment industry. The acquisition will allow Solenis to expand its product offerings and customer base, while also furthering its sustainability efforts.

Deal Structure

According to the acquisition agreement, Solenis will acquire Diversey with a full cash transaction valued at $4.6 billion. Diversey shareholders will receive $8.40 per share in cash, which required a premium of 41% over the initial closing share price on the seventh of March. The other shareholders, Bain Capital, will receive $7.84 per share in cash with a portion of their shares being transitioned into an affiliate of Solenis. They plan to finance the transaction with available cash resources with the expected completion date of the acquisition to be in the second half of 2023.

J.P. Morgan and Centerview Partners are serving as financial advisors to Diversey on the transaction. Kirkland & Ellis is providing legal counsel to Bain Capital and Diversey. BofA, Goldman Sachs and Piper Sandler are serving as financial advisors to Solenis on the transaction. Gibson, Dunn & Crutcher is providing legal counsel and Willkie Farr & Gallagher is providing debt financing counsel to Platinum Equity and Solenis. BofA and Goldman Sachs are leading the debt financing for the acquisition.

Diversey Overview

Diversey’s purpose is to go beyond cleaning to take care of what’s precious through leading hygiene, infection prevention and cleaning solutions. They develop and deliver innovative, mission-critical products, services and technologies that save lives and protect the environment.

Their fully-integrated suite of solutions combines patented chemicals, dosing and dispensing equipment, cleaning machines, services and ancillary digital analysis and serves more than 85,000 customers in over 80 countries via their vast network of approximately 9,000 employees globally.

Bain Capital purchased Diversey for $3.2 billion, making it a significant player in the cleaning and hygiene industry. With Bain Capital's ownership stake, Diversey has been able to expand its product offerings, invest in new technologies, and strengthen its position in the market. In 2021, Diversey went public with Bain Capital remaining a major shareholder, helping to further increase the company's visibility and growth prospects. The acquisition by Bain Capital has played a key role in helping Diversey achieve its current standing as a global leader in the cleaning and hygiene industry.

Founded: 1923

Number of Employees: 9,000

EV: 4,515,000,000

LTM Revenue: 2,765,900

LTM EBITDA: 107,000

Market Cap: 2,632,000,000

Industry Insight

The chemical hygiene sanitization industry is an integral part of the health, food, and cleaning sectors. Chemical hygiene sanitization involves the use of approved chemical sanitisers for the proper cleaning of objects, equipment, and facilities to prevent the spread of pathogens and diseases. The industry caters to different market segments such as healthcare, food and beverage, hospitality and industrial cleaning.

In the healthcare industry, chemical sanitization is the most important pillar of medicine in hospitals and clinics, it is a critical process in preventing the spread of diseases and infections; devices, room surfaces and surgical instruments all require high-level disinfection and sterilisation to prevent the spread of pathogens. The current regulations as part of the FDA maintain a list of cleared liquid chemical sterilants and high-level disinfectants to ensure that all medical devices are properly sterilised to be reused with other patients without causing much harm to the environment.

Other major industries also rely on chemical hygiene sanitization, whether it's F&B, hospitality or manufacturing. Foodborne illnesses are a significant public health concern, especially during and after the Covid-19 pandemic which highlighted the importance of hygiene. Usually sanitise utensils, equipment, swimming pools, gyms, etc.

Strategic Rationale

The strategic rationale behind the acquisition of Diversey by Solenis for $4.6 billion in March 2023 is to consolidate their positions as speciality chemical providers in the water treatment industry. The acquisition will allow Solenis to expand its product offerings and customer base while furthering its sustainability efforts. The combination of two leading global products in the chemicals and hygiene sanitization industry will enable Solenis to achieve synergies and better serve customers. The acquisition of Diversey also provides Solenis with a broader and more diversified customer base in the food and beverage, hospitality, and industrial cleaning sectors. Overall, the acquisition aligns with Solenis' long-term growth strategy and will inevitably lead to more significant competitive advantages for the organisation.

Long-Term Prospects

The long-term prospects of Diversey and Solenis following their merger remain positive. The acquisition of Diversey will allow Solenis to expand its product portfolio and reach a broader customer base across various industries, including food and beverage, hospitality, and industrial cleaning.

The merger reinforces and allows the companies to focus and put increased effort towards sustainability and environmentally friendly initiatives. In addition to the financial advantages of both firms being merged and acting as a single corporation, it will have increased market share and returns for investors.

Overall, the long-term prospects for Diversey and Solenis following their merger seem optimistic given their respective industry expertise and complementary areas of focus. With their expanded global reach, innovative product development initiatives, and combined focus on sustainability efforts, they have the potential to remain leading players in the chemicals and hygiene sanitization industry for years to come.

Written by Zaineh Abed Alhameed (King’s College London)

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