Chemicals sector comment – August 2012

Date

Following the acquisition in June of UK company Phytone Ltd by US-listed FMC Corporation, July saw yet another transatlantic acquisition in the consolidating chemicals sector.

PE-backed United Initiators GmbH & Co KG has acquired Syrgis Performance Initiators (SPI) Inc., from PE-backed Syrgis Performance Products Inc. SPI is a leading manufacturer of customer tailored formulations of ketone peroxides in North America and Europe and benzoyl peroxides in North America. Both products are organic peroxide initiators used in the production of thermoset composite materials. The acquisition provides a partial-exit for Edgewater Capital Partners.

The transaction signifies an obvious strategic fit for United Initiators, an innovative market leader in the production of organic peroxides and persulfates, and comes only 10 months after Vision Capital LLP purchased a majority stake in United Initiators from Speyside Equity LLC, a Philadelphia-based private equity group which has remained actively involved in the business. Seeing enormous potential for international growth and opportunities for consolidation across the organic peroxides market, Vision Capital invested in the company as an attractive buy-and-build opportunity.

Given the product ranges and geographical presence of the two companies there are clear synergies to be made which will speed up United Initiators aim of becoming a world leading player in specialty initiators. United Initiators is headquartered in Germany with further production facilities for organic peroxides in the USA and Australia as well as inorganic peroxides in China. SPI is headquartered in the US and Sweden and has trading operations in Shanghai. The integration will enable United Initiators to build upon SPI’s established customer base and additional manufacturing and distribution networks in the Americas, Europe and Asia-Pacific. With sales of approximately $50m for SPI, the combined turnover of the two companies is expected to exceed $240m. United Initiators has said that it will continue to scan the market for further acquisitions.

Deals

United Initiators GmbH & Co. KG has acquired Syrgis Performance Initiators Inc (SPI), a manufacturer of custom tailored formulations of ketone peroxides in North America and Europe and benzoyl peroxides in North America. The acquisition will improve United Initiators’ access to the organic peroxides market across the Americas, Europe and Asia-Pacific in addition to strengthening its position in persulfates.

Clariant AG has agreed to acquire the remaining 40% of Sued-Chemie Alvigo Catalysts GmbH, a joint-venture between Alvigo AS and Sued-Chemie Alvigo AG which was taken over by Clariant earlier this year. The company is a leading producer of syngas catalyst.

Royal DSM NV has acquired Ocean Nutrition Canada Ltd, a global provider of fish-oil derived nutritional products to the dietary supplement and food and beverage markets. The acquisition strengthens and complements DSM’s newly established global Nutritional Lipids growth platform.

Brenntag AG has acquired The Treat-Em-Rite Corporation (TER Corporation), a chemical distribution company in the oil and gas industry based in Texas, USA. TER Corporation is located in Eahle Ford Shale, a fast growing natural gas shale area therefore representing a significant geographical strategic fit for Brenntag.

Arkema Group SA has acquired Brazilian Group Resicryl’s Aracariguama-based production site which produces additives and emulsions. The acquisition is in line with Arkema’s strategy to speed up development in Latin America around high added value products.

United Phosphorus Ltd has bought Dutch company Agrichem BV, a company engaged in the production, marketing and selling of crop protection products in the European agrochemicals market. The acquisition will complement UPL’s existing portfolio and give the company access to new and enhanced markets in Europe.

France based Axson Technologies SA has acquired the high performance resin business of Nanoledge Inc, an innovative start-up focused on the high performance epoxy market. The transaction provides an exit for Canadian investment company Telesystem Ltd. The transaction enhances Axson’s product offerings in existing markets as well as further develops presence in new expanding markets.

Pakistan conglomerate Yunus Brothers Group has agreed to acquire AkzoNobel’s 75.81% holding in ICI Pakistan Ltd for USD 152.5m. The agreement follows the restructuring of AkzoNobel’s activities in Pakistan in June whereby ICI Pakistan’s paints and coatings business was delisted into the new listed company, AkzoNobel Pakistan Ltd.

Hexpol AB has acquired European Plastic Sealants AG, a specialist in the development of compounds for caps and closures. The acquisition will complement Hexpol’s existing position in custom TPE and complimentary compounds and provide further opportunities for growth.

Bayer CropScience AG has acquired AgraQuest Inc, a global supplier of innovative biological pest management solutions based on natural microorganisms for USD 425m plus milestone payments. The acquisition will enable Bayer CropScience to build a leading technology platform for green products and to strengthen its strategically important fruits and vegetables business, whilst also opening up new opportunities in other crops and markets.

Banner Chemicals Ltd has acquired KMZ Chemicals Ltd, a UK distribution company offering a range of products to the polymers and coatings industries. The KMZ product range is complementary to the existing Banner Chemicals Speciality Chemicals’ product portfolio.

Dow Europe Holding BV and Aksa Akrilik Kimya Sanayii AS, a world-leading acrylic fibre company have entered into a joint-venture agreement with the formation of DowAksa Advanced Composites Holdings BV to manufacture and commercialise carbon fibre and derivatives.

Arclin Inc has acquired the North American Operations of Coveright Surfaces Holding GmbH, a German producer of surfacing materials for the furniture, flooring, building, woodworking and automotive industries. The acquisition will enable Arclin to expand its portfolio of overlay products and increase its geographic coverage.

Bostik Inc, a subsidiary of Total SA, has acquired Usina Fortaleza Industria e Comercio de Massa Fina Ltda, a Brazil based manufacturer of materials and quality adhesives for the construction industry. The acquisition is in line with Bostik’s growth strategy to expand in fast-growing geographies.

BASF SE had acquired ITWC Inc, a US manufacturer of urethane solutions and polyurethane products and systems. The acquisition will enable BASF SE to enhance its polyurethane systems business and its global presence in existing markets whilst also expanding its customer base.

Quaker Chemical Corporation has acquired NP Coil Dexter Industries Srl, an Italian metal treatment chemicals manufacturer and wholesaler. The acquisition is a good strategic fit for Quaker and will complement existing businesses extending coil coating and surface treatment to the steel flat rolling process.

Brenntag AG has completed the acquisition of ISM / Salkat Group, a leading distributor of specialty chemicals in Australia and New Zealand. The acquisition expands Brenntag’s market position in Australia and New Zealand and enlarges the existing speciality product portfolio in the region.