Chemicals sector comment – September 2011

Date

Ashland has completed its acquisition of US peer International Specialty Products (ISP) for $3.2bn.

The transaction is the next step in Ashland’s repositioning as a higher margin producer of speciality chemicals. ISP’s presence in the food and beverage, personal care, oilfield and pharmaceutical sectors will push Ashland’s EBITDA margins towards the 15% level, well ahead of its historic margins. The group will be able to enhance its margin performance yet further with disposals involving ISP’s commodity activities. These include its butanediol (BDO) and emulsion styrene-butadiene rubber (ESBR) assets which ISP had identified as non-core even before it was acquired by Ashland. Furthermore, Ashland is likely to look at its own non-core activities including its performance materials unit which includes adhesives, unsaturated polyester resins (UPS) and vinyl ester resins and adhesives. In the light of the acquisition of Lubrizol by Berkshire Hathaway, the group may also see it is opportune time to sell its Valvoline lubricants business. The group sold its distribution division to TPG Capital for $930m last year.

Deals

Nuplex Industries Ltd has acquired the masterbatch unit of Acquos Pty Ltd. The unit is an Australian manufacturer of additive masterbatches and concentrated pigments for the plastic industry. It was formed through Acquos’ acquisitions of the Australian masterbatch businesses of Ciba AG and Clariant AG.

UK private equity firm Nova Capital has acquired five businesses from Amalgamated Metal Corp plc for $205m. The portfolio includes Debro Chemicals & Pharmaceuticals Inc, a Canadian distributor of fine and speciality chemicals.

RPM International Inc has acquired API SpA, an Italian manufacturer of polyurethane and urethane-based decking and flooring solutions for cruise ships, naval vessels and yachts. API’s range of products includes anti-corrosion materials, protective coatings, restoration coatings, sealants, surface coatings, tank coatings and waterproofing products.

Univar Inc has acquired Arinos Química Ltda, a Brazilian distributor of commodity and speciality chemicals. The acquisition will provide Univar with a platform for further expansion in the Latin American market.

Frutarom Industries Ltd has acquired Aromco Ltd, a UK manufacturer of sweet and savoury flavourings. The $25m acquisition will allow Frutarom to build its presence in the emerging markets thanks to Aromco existing presence in the African, Asian and Eastern European regions.

Murphy & Son Ltd has acquired Catomance Technologies Ltd, a UK supplier of textile finishing agents. Catomance specialises in leather processing agents and water repellant treatments for the paper industry. The company will expand Murphy’s existing laboratory and testing services.

Hong Kong private equity firm Primavera Capital has acquired Chemspec International Ltd, a Chinese contract manufacturer of agrochemicals, electronic chemicals and pharmaceuticals. The transaction will see the management of Chemspec retain a majority position in the company.

Sika AG has acquired Colauto Adesivos e Massas Ltda, a Brazilian manufacturer of adhesives and sealants. The acquisition will reinforce the Swiss group’s presence in the Latin American market and will offer it the ability to supply acoustic damping and structural reinforcement products for the automotive and transportation industries.

PPG Industries Inc has acquired the coatings businesses of Colpisa Colombiana de Pinturas SA, a Colombian manufacturer and distributer of coatings for architectural, automotive OEM, automotive refinishing and industrial applications. The acquisition will enhance PPG’s presence in the Latin American coatings market.

US private equity firm Golden Gate Capital has acquired EP Minerals LLC, a US supplier of diatomaceous minerals. EP Minerals specialises in absorbents, filter aids and functional additives for the biofuels, catalysts, coatings, crop chemicals, food and beverage, plastics and water treatment markets.

Fertiberia SA has acquired Adubos do Portugal SA from Grupo Jose de Mello SA (GJM). Adubos do Portugal is a manufacturer of ammonium nitrate for fertilisers. The transaction also includes GJM’s subsidiaries CUF-Brazil SA, Intergal SA and Sopac SA.

Brenntag AG has acquired Multisol Group Ltd, a UK distributor of fuel and lubricant additives. The acquisition will allow the German group to develop its market position in the distribution of specialty chemicals with focus on lubricants and base oils. It will also expand the group’s mixing and blending capabilities.

International Chemical Investors Group SA (ICIG) has acquired Roche AG’s API plant in Boulder, Colorado, USA. The acquisition will provide ICIG’s Corden Pharma business with a peptide manufacturing facility as a complement to its existing fine chemicals and pharmaceutical manufacturing operations.

US private equity firm Goradia Capital has acquired Sunoco Inc’s phenol manufacturing facility in Haverhill, Ohio for $106.5m. The business will be renamed Haverhill Chemical LLC and will complement Goradia Capital’s investments in the petrochemical and polymer markets. The transaction marks Sunoco’s exit from chemicals manufacturing.

DKSH AG has acquired Tiger Chemicals Co, an Australian chemicals distributor. Tiger Chemicals will be integrated into the Swiss group’s Performance Materials division where it will enhance DKSH’s presence in the Asia-Pacific region.