Chemicals Sector Comment – November 2013

Date

Clariant has recently agreed to divest its Detergents & Intermediates business to International Chemical Investors SA and its Leather Services business to Stahl Holdings BV, marking the end of a portfolio overhaul which began following the $2.5bn acquisition of Sued-Chemie in 2011.

With the aim of becoming the global leading company for specialty chemicals, Clariant’s growth strategy is now focused on high-margin sustainable growth areas such as ingredients for cosmetics and chemicals for the oil and gas industry with a distinct move away from commodity chemicals.

Having already finalized the sale of its interest in its Textile Chemicals, Paper Specialties, and Emulsions businesses to SK Capital earlier in the year, Clariant’s recent disposals have removed c. $1.9bn in sales revenue from the business. These discontinued operations were reporting EBITDA margins of 7.6% at the end of 2012, compared to 13.3% EBITDA margins for the core businesses. Clariant’s objective is to achieve an EBITDA margin of 17% by 2015.

Clariant’s seven core business units comprise Additives, Catalyts, Functional Materials, Industrial & Consumer Specialties, Masterbatches, Oil & Mining Services, and Pigments.

Deals

Melrob Group Holdings Ltd has acquired Eurolabs Ltd, a UK based distributor specialising in the supply of organic fine chemicals and intermediates for use in pharmaceutical, agrochemical and specialty chemicals. The acquisition will strengthen Melrob’s presence in Europe.

Stahl Holdings BV is to acquire the Leather Services business of Clariant AG. The combination of both businesses will create a global leader in leather chemicals with significant synergy potential.

AkzoNobel NV has signed a joint-venture agreement with Omar Zawawi Establishment LLC to acquire a 50% controlling stake in Sadolin Paints Oman SAOC, a manufacturer of decorative paints and performance coatings in Oman. This agreement forms part of AkzoNobel’s growth plans in the Middle East.

Kemira Oyj and Wilmar International Ltd are to form a joint-venture to manufacture Alkyl Ketene Dimer (AKD) wax in China. The JV entities in China will be owned 50-50 and will integrate the current facilities of Kemira in Yanzhou and the relevant Wilmar facilities in Lianyungang.

BASF Corporation is to acquire Verenium Corporation, an industrial biotechnology company focused on the development and commercialisation of high-performance enzymes. Combining Verenium’s scientific and technological excellence with BASF’s enzyme activities and its global access into all relevant markets will strengthen BASF’s footprint in the strategic enzyme growth market.

Kemira Oyj is to acquire Soto Industries, a privately owned Vancouver based specialty chemicals and services supplier to the pulp and paper industry. The acquisition will assist Kemira in securing their position as a leading supplier to the pulp and paper industry in North America and is expected to provide synergies through raw materials, logistics and fixed cost savings.

Huntsman Corporation is to acquire the Titanium Dioxide Pigments business and four other non-strategic businesses of Rockwood Holdings Inc, for an enterprise value of $1.325bn. The divestment for Rockwood is in line with its strategy to dispose of non-core assets in order to focus on the specialty chemical sector.

Brenntag AG is to acquire the chemical distribution division of the Zytex Group, a biotechnology food formulation and manufacturing company in India. With this acquisition, Brenntag is further strengthening its Nutrition and Health business in India by adding new customer segments and products to its portfolio as well as further expanding its strategic relationships with key global suppliers.

Lanxess AG is to acquire the business operations of the French subsidiary of the insolvent Dutch company thermPhos International BV, a Phosphorus Pentoxide and Polyphoshoric Acid producer. Both products are complementary to Lanxess’s existing phosphorus portfolio.

EMEA Holding FZE has acquired the Pakistan operation of Orkila Holding SAL, a leading international specialty distributor. The divestment will enable Orkila to focus on its core markets in the MEA region.

The management, with the backing of investment company Pentahold NV, has acquired Devan Chemicals NV, a Belgian producer of specialty chemicals. In 2012, Devan Chemicals, which has operations in Belgium, Portugal, England and the US, reported an annual turnover of €13m.

OCP SA is to acquire Bunge Limited’s 50% ownership interest in their Moroccon fertilizer joint venture Bunge Maroc Phosphore S/A. Bunge recently sold their fertilizer business in Brazil so the divestment makes strategic sense.

IMCD Group BV has acquired a controlling stake in Makeni Chemicals Comercio e Industria de Produtos Quimicos Ltda, one of the largest distributors of chemical products in Brazil. The deal marks the entry of IMCD into the Latin American market.

Eras Ingenierie SA has acquired SNC Lavalin Group Inc’s France’s pharmaceutical and chemical activities, specialists in the engineering and project management of industrial processes for the pharmaceutical and chemical sectors. The acquisition will open up new geographies for Eras.

Aquafil SpA has acquired Domo NV’s nylon carpet yarn activities, which operates under the brand name Xentrys. The transaction supports Domo Chemicals’ strategy to concentrate on global growth of its Chemicals, Polymer and Engineering Plastics businesses.

Altana AG has acquired the European water-based and overprint varnishes division of The Valspar (France) Corporation SAS. The acquisition will add additional know-how, technologies and customers to Altana’s Graphic Arts business line and further strengthen their position as a leading supplier of overprint varnished in Europe.

Ring International Holding AG has acquired a 73.12% stake in Helios d.d., a Slovenian listed coatings maker. The sale will provide Ring International with a greater market share in industrial coatings and will enable the company to attain more effectiveness at group level, especially in the field of R&D.

International Chemicals Investors SE has acquired the Detergents & Intermediates business of Clariant AG for c. $64m. The divestment marks the next step in streamlining Clariant’s portfolio allowing the group to focus on exploiting its market positions and intensifying growth by focusing on customers and innovation.

Platform Acquisition Holdings Ltd is to acquire MacDermid Inc, a global provider of high value-added specialty chemicals for c. $1.8bn plus contingent consideration. Following the close of the transaction, Platform which will be renamed Platform Specialty Products Corporation, expects to complete a listing of its shares on the New York Stock Exchange by the end of 2013 and will look to build a portfolio of specialty chemicals businesses.

Albermarle Corporation has acquired Cambridge Chemical Company Ltd, a company engaged in the production of high purity metal organic chemicals used in the laser market. The acquisition will further strengthen Albermarle’s offerings in the electronic materials market and will also benefit from a number of R&D and distribution synergies resulting from the acquisition.

Solway SA has acquired Chemlogics Group LLC, a US firm specialising in chemicals for oil and gas exploration, for $1.3bn. The acquisition will be integrated in to Solvay’s Novecare business unit and will create a leader with an extensive portfolio of tailored chemicals for the fast-growing oil & gas market, serving stimulation, cementing, production and water management applications.

International Chemical Investors SE (ICIG) is to acquire Peptisyntha SA, a Brussels based custom manufacturer of peptides for pharmaceutical use, from Solvay SA. The acquisitions means that ICIG is adding an industry leading liquid phase synthesis capability and a team of highly skilled staff to its existing operations.