Chemicals sector comment – April 2012

Date

Private equity interest in the chemicals industry has gathered pace with Arsenal Capital Partners completing the buy-out of the global colorants business of Evonik and One Equity Partners acquiring US hydrocarbons refiner Sonneborn from Sun Capital Partners.

A pioneer in white mineral oil manufacturing and the production of petrolatum used in medical salves and ointments, Sonneborn focuses on the production of refined hydrocarbon products. Its product range includes cable filling compounds, compressor lubricants, ink oils, microcrystalline waxes, petrolatums, plastic oils, refrigeration oils, sodium sulfonates and white oils.

US private equity firm Sun Capital originally acquired the company from Crompton in 2005. Subsequently, it acquired two divisions from Chemtura in 2010 including the natural sodium sulfonates and oxidised petrolatum product lines of Chemtura’s petroleum additives business. Also in 2010, Sonneborn acquired the assets of DSM Special Products, a manufacturer of toluene oxidation products. The group now operates facilities in Asia, Latin America, the Netherlands and the USA.

The $400m secondary buy-out of Sonneborn has seen US private equity firm One Equity Partners pay 6.6x 2011 EBITDA. The transaction was structured as a leveraged buy-out with 40% equity equivalent to $160m and a $240m senior secured term loan facility. The group generated revenues in 2011 of just over $400m, of which half were outside of North America.

Deals

Investec Growth & Acquisition Finance has supported the buy-out of 2M Holdings Ltd, a UK chemicals distributor. 2M operates under the trading names of Banner Chemicals and Surfachem.

Eurofins Scientific SA has acquired Quality Trait Analysis Inc (QTA) from BASF SE. QTE is a US provider of on-site quality analysis services for biodiesel, chemicals, dietary supplements, food ingredients, pesticides and seeds.

Swiss private equity firm Quantum Kapital has acquired the offset printing inks business of BASF SE. The Dutch business was part of BASF’s acquisition of Ciba AG in 2009 and focuses on the production of offset printing inks and pigment preparations for the plastics industry.

BASF SE has acquired the PET foam business of BC Foam SpA. The acquisition with strengthen BASF’s position in the market for complex structural foams, particularly for those used in renewable energy applications such as rotor blades for wind turbines. BASF has also acquired the lithium iron phosphate (LFP) battery materials technology of Clariant AG. LFP is a cathode material used in the production of advanced lithium-ion batteries for high-power applications such as grid storage batteries and hybrid vehicles. The technology will be integrated into BASF’s Battery Materials unit.

US private equity firm Huntsman Gay Global Capital has acquired Citadel Plastic Holdings Inc, a US provider of plastics compounding services. Citadel’s operating companies includes thermoset materials manufacturer Bulk Molding Compounds Inc and compounder Matrixx Group Inc. The transaction provides an exit for US private equity firm Wind Point Partners.

RTP Corp has acquired a line of conductive compounds from Clariant AG. The transaction involves a range of conductive compounds based on polypropylene, polystyrene and PVC.

Indofil Industries Ltd has acquired the European Dithane fungicide business of Dow Chemical Co. The Indian group has acquired the Dithane products sold in Europe but no other parts of the Dow AgroSciences’ Dithane business.

Air Products & Chemicals Inc has acquired DuPont de Nemours Co’s 50% stake in DuPont Air Products NanoMaterials LLC (DA NanoMaterials). Air Products will now own 100% of DA NanoMaterials, a US manufacturer of chemical mechanical planarization slurries for the semiconductor and wafer polishing industries. Air Products has also acquired the advanced adsorption technology assets of Xebec Adsorption Inc. The business is a manufacturer of adsorbents, beaded adsorbents, and rotary valves air separation units for water and carbon dioxide removal, hydrogen-carbon monoxide syngas purification, pressure swing adsorption nitrogen generation and vacuum swing adsorption oxygen production.

Cosan SA has acquired Comma Oil & Chemicals Ltd from Esso Petroleum Co Ltd, a subsidiary of ExxonMobil Corp. Comma is a manufacturer of car care products and lubricants and provides the Brazilian group with its first entry into the European automotive specialties and lubricants markets.

US private equity firm Arsenal Capital Partners has acquired the global colorants business of Evonik Industries AG. The unit is a manufacturer of colourants for decorative end-use applications in the architecture sector, as well as colourants for industrial applications such as maintenance, marine and timber coatings.

US private equity firms Akoya Capital Partners and Century Park Capital Partners have acquired ICM Products Inc, a US formulator of speciality silicones. ICM specialises in silicone defoamers, emulsions and polymers for a wide range of applications in the automotive care, cleaning, coatings, food processing and personal care markets.

IMCD Group NV has acquired Jan Dekker International BV, a Dutch chemicals distributor focusing on ingredients for the cosmetics, food and personal care industries. The acquisition will reinforce the Dutch group’s global operations with the addition of Jan Dekker’s sales offices in France, Germany, Poland, Spain and the UK, as well as its laboratories in France and the Netherlands. IMCD is backed by US private equity firm Bain Capital.

Coventya SA has acquired Molecular Technology Ltd, a UK manufacturer of electro-coating products for decorative applications in the metal finishing industry. The acquisition will complement the French group’s existing range of speciality chemicals for the electroplating and surface treatment industries. Coventya is backed by UK private equity firm Equistone Partners.

UK private equity firm a2e Venture Catalysts has acquired the Muraspec commercial wallcoverings business of OMNOVA Solutions Inc. The disposal will allow the US group to focus on its Performance Chemicals business as well as the coated fabrics, laminates and performance films product lines within its Decorative Products business.

Witec GmbH has acquired Organica GmbH, a German manufacturer of fine chemicals. Organica has expertise in hazardous chemical reactions used to produce advanced organic intermediates for industrial and pharmaceutical applications.

US private equity firm One Equity Partners has acquired Sonneborn Inc, a US manufacturer of refined hydrocarbon products. The $400m transaction provided an exit for US private equity firm Sun Capital Partners.

Development Bank of Japan has partially acquired Sony Chemical & Information Device Corp (SCID) from Sony Corp. SCID is a manufacturer of adhesives and films used in cameras, mobile phones and televisions. The Japanese group has retained SCID’s manufacturing capabilities for magnetic tape and substrates used in LCDs.

General Chemical Performance Products LLC has acquired Southern Water Consultants Inc, a US manufacturer of water treatment chemicals for commercial, industrial and municipal applications. The acquisition will complement the US group’s existing range of agricultural, chemical processing, oil refining and water treatment products.

A-Gas International Ltd has acquired Technochem Pty Ltd, an Australian blender, re-packer and distributor of refrigerant gases. The acquisition is part of the UK group’s strategy of growing its presence in the Asia-Pacific and North American markets. A-Gas is backed by UK private equity firm LDC.

DeWolf Chemical Inc has acquired Tempo Canada Inc, a Canadian distributor of speciality chemicals distributor. The acquisition will reinforce the Canadian group’s presence in the North American cosmetics, household products, institutional cleaning and personal care markets.

Bayer AG has acquired the germplasm assets of ProSoy Genetics Inc, the soybean breeding division of Thompson Agronomics Inc. ProSoy Genetics is a producer of germplasm in maturities 1 through 3 which is appropriate for much of the Canadian and US soybean market. The acquisition will be integrated into Bayer CropScience.

Lanxess AG has acquired Tire Curing Bladders LLC, a US manufacturer of rubber bladders. The acquisition reinforces the position of the German group’s Rhein Chemie subsidiary in the global market for tyre bladders for agricultural vehicles, commercial vehicles, construction equipment and off-highway vehicles.

Royal DSM NV has acquired certain assets, licenses and other agreements for food enzymes and oilseed processing from Verenium Corp. The $37m transaction reinforces the product portfolio within the Dutch group’s Nutrition cluster with the addition of Verenium’s food enzymes and oilseed processing technology.