Chemicals Sector Comment – August 2013

Dato

UK natural chemicals business Croda International has taken a 65% stake in Chinese firm Sichuan Sipo Chemical Co.

Sichuan Sipo Chemical Co, a non-listed natural specialty chemicals manufacturer based in Mianyang City, Sichuan Province, produces specialty derivatives from natural raw materials. Products include primary amides, novel fatty acids and specialty esters. In 2012, the business reported a turnover of £28m and EBITDA of £3.1m.

Croda paid £38.2m for the majority stake which will increase its presence in the emerging markets of Asia and strengthen its performance technologies operation. Sichuan Sipo Chemical Co has a state-of-the-art production facility which will extend Croda’s capacity and increase proximity to customers in the region. The acquisition will strengthen Croda’s existing operations across China and the group’s overall position in the ever-growing Asia region. All Sipo’s products will be sold through the Croda global sales network.

With a rapidly growing market for specialty chemicals in China, largely driven by rising domestic consumption, having proximity to customers not only at a national level but also at a regional level is key to penetrating this vast market.

Deals

McLaughlin Gormley King Company Inc, an affiliate of Sumitomo Chemical Co Ltd, is to acquire the Environmental Science Division (ESD) of Valent BioSciences Corporation. The acquisition will broaden MGK’s portfolio of active ingredients and formulation technologies, enhancing its portfolio of insect control solutions.

Rhodia SA, a unit of Belgium-based Solvay SA, and GranBio Investimentos SA have agreed to enter in to a joint-venture to produce biochemicals from renewable sources in Brazil. Each partner will have a 50% stake in the joint-venture which will be the world’s first biomass-based n-butanol factory in Brazil with production starting in 2015.

Altana AG has acquired the specialty coatings business of Henkel AG which includes the brands MiraFoil and Miracure. The acquisition is in line with Altana’s North American growth strategy and focus on innovative specialty chemicals.

Clariant AG, a world leader in specialty chemicals, and Tasnee Company, one of the largest industrial conglomerates in Saudi Arabia have entered in to a joint-venture for the manufacture of masterbatches, whereby Tasnee will acquire a 40% stake in Clariant’s existing masterbatches operations in Saudi Arabia. The joint-venture will enable the companies to develop new solutions for the plastics market.

Sika AG is to acquire the building adhesives business of Akzo Nobel NV. The transaction which is expected to complete by the end of the year will enable Akzo Nobel to focus its decorative paints business on the strong strategic paints positions they have in Europe and the growth markets of Asia and South America.

Tunap Group GmbH has acquired a 75% stake in Kemacos Full Filling Service GmbH, an Austrian full service provider to the cosmetics industry. The remaining 25% stake is still held by the Joachim Czech family.

LKQ Corporation Inc has acquired five UK paint distributors: Bee Bee Refinishing Supplies Halstead Limited, JCA Coatings Limited, Milton Keynes Paint & Equipment Limited, Premier Paints Limited and Sinemaster Motor Factors Limited. The acquisitions which include a total of 26 locations throughout the UK, will expand LKQ’s Euro Car Parts collision parts business bringing the company a step closer to becoming the leading one-stop shop supplier to the collision repair industry in the UK.

Chem-Trend LP has acquired Zyvax Inc, a provider of release agents for wind turbine blades. The company now plans to make further acquisitions in growing markets where technology makes a big difference and acquisitions will focus on such megatrends as green energy, lighter materials, more sustainable solutions for customers and adding value through technology.

Eurochem Mineral and Chemical Company CJSC, Russia’s largest mineral fertilizer producer, has formed a joint-venture with Migao Corporation, a China-based specialty potash fertilizer producer, to produce fertilizers. The JV will enable EuroChem to expand its presence in China and increase the share of specialty fertilizers in its product mix whilst Migao will benefit from EuroChem’s strong global position and expertise in the nitrogen and phosphate segments.

SPC Europe Ltd has acquired the assets of Iacp Jevsa SA, a Barcelona-based rubber compounder. The transaction secures the future of Jevsa, which has been in financial difficulties since 2008.

Croda International plc is to acquire a 65% stake in Sichuan Sipo Chemical Co Ltd, a natural speciality chemicals manufacturer based in Sichuan Province, China. The acquisition of Sipo will provide additional capacity and increase Croda’s proximity to customers in the region, strengthening its existing operations across China and the Group’s overall position in Asia.

Altana AG has acquired the clay based additives business of Rockwood Holdings Inc for a purchase price of $635m. The transaction is expected to close by the end of the year and is in line with Rockwood’s strategy to maximise shareholder value.

Picanol NV has acquired a 27.6% stake in Tessenderlo Chemie NV, a worldwide specialty company focused on food agriculture, water management and on valorising bio-residuals, from SNPE SA. With this acquisition the Picanol group wants to increase the diversity and geographical spread of its activities, in order to better protect itself against the cyclical weaving machine business in which it operates today.

Sasol Limited and INEOS Olefins & Polymers USA have signed a Memorandum of Understanding with the intent to form a joint-venture to manufacture high density polyethylene (HDPE). The partnership will leverage the expertise of two global players in the chemical market and will involve the development of a world-scale HDPE plant which will allow the JV to monetize ethylene and supply a high quality product.

CropEnergies AG has acquired Ensus Limited, a UK bioethanol producer with one of the largest production plants for bioethanol in Europe with an annual capacity of 400,000 cubic metres of bioethanol and 350,000 tonnes of dried protein animal feed. The acquisition will strengthen CropEnergies’ position as one of the leading bioethanol producers in Europe.

Christeyns NV has acquired Govi NV, a Belgian producer of process chemicals and predominantly focused on synthetic oils. The acquisition will strengthen the oleo chemicals operations at Christeyns.

Aalberts Industries NV has acquired GtO Slovakia sro, active in the field of surface treatment with one production facility near Roznava, Slovakia. GtO is already working closely together with Galvanotechnik Baum GmbH in Zwoenitz, Germany, acquired in 2011 and this further acquisition will enable greater expansion in the German and Eastern European growth markets.

Sika AG is to acquire JMTexsa SA de CV and Texca India Ltd, two leading manufacturers of waterproofing membranes. The acquisitions strengthen Sika’s growth strategy and accelerate the expansion in emerging markets.