Chemicals sector comment – September 2012

Date

Tessenderlo Group’s ambition to become a specialty chemicals company took a step closer in August with the intention to divest the group’s continental European profile activities and the sale of its Chinese organic chlorine derivatives activities.

The European profiles business, known as Profialis, offers PVC systems for windows and doors. The business is to be sold to US-headquartered global private investment firm OpenGate Capital, for an undisclosed sum. The Chinese organic chlorine derivatives business also went to a private equity investor, based in Hong Kong.

These latest transactions follow a series of divestments for Tessenderlo over recent years as the group moves away from being a commodity business to an international specialty group. As non-core activities are disposed of, the group continues to invest in its core growth areas with a focus on specialty products and services in food, agriculture, water management and valorising bio-residuals.

Last year Clearwater Corporate Finance advised Tennants Consolidated Ltd on the acquisition of Tessenderlo Fine Chemicals UK Ltd.

Deals

Private equity firm Carlyle Group LP is to acquire E.I. du Pont de Nemours and Company’s car paint business for $4.9bn. The divestment will allow DuPont to cut debt and be better placed to make acquisitions in priority markets such as advanced materials and biotechnology.

Syngenta AG has agreed to acquire E.I. du Pont de Nemours and Company’s Professional Products insecticide business, a supplier of innovative products for the professional turf, ornamentals and home pest control markets for $125m. The acquisition includes the brands Advion® and Acelepryn® and will expand the range of products which Syngenta offers to golf course and lawn care professionals and to ornamental growers, and will also strengthen its portfolio for the control of home pests.

Roechling Engineering Plastics KG has acquired Maywo Kunstoff GmbH, a manufacturer of single and multi-layer plastic sheets and films made of acrylonitrile-butadiene-styrene (ABS) and polystyrene (PS) by extrusion for the thermoforming industry. The acquisition will strengthen Roechling’s product range of semi-finished products made of thermoplastics for applications in thermoforming technology and will offer increased internationalisation of sales markets for Maywo Kunstoff.

Christeyns NV has acquired a 50% stake in Klenzan Ltd, a UK specialist in chemicals for food hygiene. The acquisition ties well with Christeyns strategy to expand in the food hygiene business and will provide Klenzan with the expertise and financial strength to grow.

Prosol Lacke & Farben GmbH has agreed to acquire the decorative paints business of Relius Coatings GmbH & Co KG in Germany and Relius France SAS in France from BASF SE. The business encompasses construction paints and plaster as well as varnishes and glazes for construction application and represents an excellent strategic fit for Prosol enabling the company to expand their network of sites.

Private equity firm IK Investment Partners Limited is to acquire Groupe Unipex SA, a specialty chemicals distributor for the pharmaceutical, fine chemicals, cosmetics and nutrition industries through the newly created Unipex International holding vehicle.

Warwick International Group Ltd has acquired IDC International Detergent Chemicals Ltd (IDC), a manufacturer of tetraacetylethylenediamine (TAED), a bleach activator used in laundry and household product applications. The acquisition will further strengthen Warwick’s position as an important supplier to the detergent industry.

Royal DSM NV has agreed to acquire Tortuga Companhia Zootécnica Agrária (Tortuga), a Sao Paulo-based manufacturer of nutritional supplements with a focus on pasture raised beef and dairy cattle. The acquisition allows DSM to capture value from its extended value chain presence with a broad portfolio of nutritional ingredients for animal nutrition, while leveraging its strong international footprint.

CF Industries Holdings Inc has agreed to acquire Viterra Inc’s interests in Canadian Fertilizers Ltd for $910m. Canadian Fertilisers owns the Medicine Hat Nitrogen Complex which is Canada’s largest nitrogen fertiliser manufacturing facility. The acquisition represents a low risk expansion of CF Industries’ nitrogen supply capability since they have operated the complex for over 35 years.

FMC Corporation has acquired Pectine Italia SpA, an Italian-based manufacturer of pectin for the food ingredients market. The acquisition marks FMC’s entry into the pectin market, expanding the company’s industry-leading portfolio of hydrocolloid texturants and stabilizers.

Ascendis Health (Pty) Ltd has acquired Chempure (Pty) Ltd, a chemical supplier to the food, health and pharmaceutical industries. Ascendis is controlled by private equity house Coast2Coast and is said to be in talks regarding further acquisitions.

Metyx Composites AS has acquired Leda Industrie srl, an Italian producer of gelcoats, adhesives, colour pastes, and special personalized resins. Leda has been affected by the negative international economic conditions and Metyz is planning to move the company’s production facilities to Turkey.

ALS Limited (formerly known as Campbell Brothers) has divested the remaining two businesses of its Chemical Division. A group of investors including some members of the existing management team will buy the Panamex Pacific business, an exporter of consumer and industrial goods. Redox Pty Ltd, an Australian based chemical company will buy the Deltrex business, a supplier of chemicals to a range of industries.

A Schulman Inc has agreed to acquire ECM Plastics Inc, a privately owned plastics compounder located in Worcester, Massachusetts for $36.5m. The acquisition represents an excellent strategic fit for A Schulman which continues to focus on niche products and is likely to provide strong synergies when combined with A Schulman’s masterbatch and engineered plastics businesses.

Private equity firm Opengate Capital LLC has agreed to acquire the continental European profiles activities of Tesse Tessenderlo Chemie NV. Furthermore, a Hong Kong based private equity firm has acquired Tessenderlo’s Chinese organic chlorine derivatives activities. The divestments demonstrate the company’s progress in executing their strategy to focus on speciality chemicals in the food, agriculture and water management sector.