KMG Announces Acquisition of Val-Tex, No Terms

KMG Chemicals, Inc.

, a global provider of specialty chemicals in select markets, today announced the acquisition of privately held Valves Incorporated of Texas (Val-Tex), a manufacturer of industrial valve lubricants and sealants since 1962, in a merger transaction. In addition to the lubricants business, KMG will acquire the 606,875 shares of KMG common stock owned by Val-Tex. The closing of the transaction is anticipated to occur in late April upon the satisfaction of certain customary conditions. Located in Houston, Texas, Val-Tex is a preferred provider of high quality, cost-effective valve lubricants primarily to the oil and gas storage, pipeline and gas distribution markets. Val-Tex manufactures and distributes industrial sealants and lubricants, as well as related products, such as lubrication equipment and fittings. Val-Tex serves the global valve maintenance market, estimated at more than $200 million in annual sales, with value-added specialty products that enable optimal valve operation and help prevent costly, unscheduled downtime at customer facilities and pipelines. In addition, Val-Tex's products provide important safety benefits along with preventing fugitive valve emissions. For the trailing twelve month period ended February 28, 2015, Val-Tex generated $12.0 million in sales and reported EBITDA of $3.4 million. "We are very pleased to welcome Val-Tex and its dedicated employees to KMG. With this strategic acquisition, KMG enters the large and fragmented global market for industrial lubricants. Val-Tex has an outstanding reputation in valve lubricants, serving several leading energy and energy service providers, and has demonstrated a track record of consistent growth and cash flow generation. When the transaction closes, Val-Tex will be immediately accretive to KMG's adjusted EBITDA and adjusted diluted earnings per share," said Chris Fraser, KMG's chairman and CEO. Mr. Fraser continued, "Our initial focus will be on seamlessly integrating Val-Tex into KMG and supporting their pursuit of growth opportunities in the North American market. We also see exciting potential to expand Val-Tex's participation in international markets by leveraging KMG's global infrastructure and distribution capabilities, particularly in Europe and Asia. Additionally, we will pursue other attractive opportunities within the global industrial lubricants market to drive cash flow and enhance long-term value for KMG shareholders."