Strengthening its leading position on the high-margin specialty & coating additives market, the Specialty & Coating Additives business (Performance Materials Division) of the US company Air Products and Chemicals would be acquired by Evonik Industries AG for 3.8 billion US dollars (approx. €3.5 billion).

It is expected that the deal would be completed by the end of the year. It is expected that the acquisition will be EPS accretive for Evonik in the 2017 business year.

“Evonik is already one of the leading producers of specialty & coating additives. Air Products’ Specialty & Coating Additives business perfectly complements this fast-growing segment. With this acquisition we are expanding our portfolio with precisely the right markets, products and innovations and continuing to invest in our growth and profitability,” Klaus Engel, CEO of Evonik Industries AG, said.

Evonik established the right conditions for integrating major acquisitions with its own strategic reorganization and creation of three independent operational segments in 2015. Hence it would be possible to rapidly integrate Air Products’ Specialty & Coating Additives business into the growth segments of Nutrition & Care and Resource Efficiency. With an attractive EBITDA margin of more than 20%, the combined specialty and coating additives business has a turnover of around €3.5 billion. At the same time, with strong differentiation from competitors and low dependence on commodity prices, Evonik is further strengthening its leading position in rapidly growing, highly profitable markets.

Evonik and the newly acquired business are highly complementary with their products and their strong positions in the key global markets. critical and highly valuable characteristics to their customers’ products is added by their specialty and coating additives.

Coating and adhesive additives, high-value PU foam additives, and specialty surfactants for industrial and institutional cleaning are the three particularly attractive, rapidly growing core markets that would be served by the two businesses.

With different and complementary products they target the same end customers. For example, while the Specialty & Coating Additives business of Air Products is well positioned in PU foam catalysts, Evonik is a leader in PU foam stabilizers. The market for these additives will grow far more quickly than overall demand for chemical products and the demand for these products is rising strongly.

Evonik and the acquired division also complement each other geographically. Evonik is particularly strong in Europe while the focus of the Air Products’ business is on North America and Asia. Allowing it to serve the increasingly global activities of its customers even more effectively, Evonik is crucially boosting its standing in the North American market with the current acquisition. Evonik is better protecting its own business against economic fluctuations in individual regions as it is reducing its dependence on the European market while at the same time it is growing in North America and Asia.

Driven by intensive interaction with customers in research and development and outstanding technical service, like Evonik, Air Products’ Specialty & Coating Additives business follows a solution-oriented business model. The innovation and leadership would be significantly strengthen for Evonik by the acquisition.

(Adapted from Streetinsider)

Categories: Economy & Finance