Chemicals Sector Comment – January 2014

Date

Frutarom Industries Ltd continues its strong growth strategy with an additional three acquisitions, making a total of four for 2013 and an investment spend of $120m.

Frutarom’s latest acquisition was US flavours business Hagelin & Company Inc for $52.4m, reinforcing its presence in the US and the fast-growing markets of Latin America and Africa as well as expanding its business in the growing beverage flavours sector. Hagelin’s sales turnover totalled $24.2 million in 2012. A couple of weeks earlier, Frutarom enhanced its presence in the Latin American region by acquiring Guatemalan-based Aroma SA – a company engaged in the development, manufacture and marketing of flavours for beverages, dairy products, confectionary, snacks and convenience food.

In November, Frutarom acquired a 75% stake in Russian flavours company Protein Technologies Ingredients Group which specialises in unique savoury taste solutions. Frutarom paid $50.3m for the stake which will bolster its position in the Eastern European markets.

These three acquisitions follow the earlier purchase in May of JannDeRee (Pty) Ltd Co., a South African developer, manufacturer and marketer of flavours with an emphasis on savoury flavours and sweet flavour solutions.

Frutarom will continue to implement its rapid growth strategy, combining organic growth with strategic acquisitions of synergetic companies and activities. Since 1990, Frutarom has acquired 32 businesses.

Deals

Taminco Corp has acquired Kemira Oyj’s ChemSolutions’ formic acid business, including the feed and the airport runway de-icing product lines, for USD 190m. After the divestment which had no synergies to Kemira’s water related core businesses, Kemira will become a purely water-focused chemical company based on Paper; Oil & Mining; and Municipal & Industry.

Sun Chemical Corp has purchased the remaining shares held by Inversiones Mundial (Grupo Mundial) in their Colombian joint venture companies Tintas and Sinclair, specialists in printing ink and related graphic arts products primarily to the packaging market in the Andean region of Latin America. The acquisition reinforces Sun Chemical’s commitment to both the printing ink business and the growing Latin American market.

Israel Chemicals Ltd is to acquire Hagesüd Group, a German producer of premium spice blends and food ingredients for meat processing. ICL’s purchase of Hagesüd will complement its existing ICL Food Specialties’ portfolio of functional ingredients and spice blends for the meat and poultry processing industries, combine know-how and strong brands and expand customer offering.

Braskem SA is to acquire a 70.6% stake in Solvay Indupa SA, a PVC and Caustic Soda producer for USD 290m. The acquisition will establish an industrial presence in Argentina for Braskem and will strengthen the company’s vinyls business and vinyls chain in Brazil and Argentina.

INEOS Group Ltd is to acquire Sasol Solvents Germany GmbH, a leading European solvent manufacturer. The acquisition is a complementary fit with the portfolio and expertise of INEOS and opens up the possibility of integration into its existing manufacturing sites in Germany.

Private equity firm OpenGate Capital LLP is to acquire Benvic®, a leading PVC compounder with three manufacturing plants in Europe, from Solvay SA. The acquisition will be a strategic complement to OpenGate’s portfolio in Europe and is in line with OpenGate’s strategy to further develop its presence in the global PVC industry.

Sika AG is to acquire LCS Optiroc Pte Ltd in Singapore and LCS Optiroc SDB BHD in Malaysia, a leading manufacturer of cementitious powder products. With the acquisitions of AkzoNobel’s Building Adhesives and Everbuild Building Products this year as well as Technokolla in 2011, this take-over strengthens Sika’s offerings in powder products and in the interior finishing sector.

Ferro Industrial Products (Pty) Ltd is to acquire Arkema Resins Proprietary Ltd and Harveys Compostites Proprietary Ltd, two coatings business of Arkema Group SA. Through the divestment, Arkema will sell non-strategic activities such as resins for composite materials, which represent few synergies with the remainder of its coating activities.

Brenntag AG is to acquire Kemira Oyj’s distribution of hydrochloric acid, sulphuric acid and sodium hydroxide business based in Denmark. The divested business is not a focus area for the munipcal and industrial segment of Kemira and the transaction will have a positive impact to the segment’s EBIT margin.

Bayer Cropscience AG is to acquire FN Semillas SA, a start-up company specialised in the breeding, production and marketing of improved soybean seeds in Argentina. This acquisition ratifies the commitment of Bayer CropScience in Argentina and marks the company’s entrance into the national soybean seed market in this country.

Teknos Group Oy has acquired a 40% stake in Manfield Chemical (Changzhou) Co. Ltd paint factory located in Changzhou, China. Manfield Chemical has been the local contract supplier of industrial coating products for Teknos in China since 2011 and the joint-venture will strengthen Teknos’s position in the Chinese market.

Chromaflo Technologies is to combine with the colourants business of CPS Color Group Oy, an integrated tinting specialist. The new colourants and dispersions specialist will operate under the name Chromaflo Technologies and brings together two players in different segments of the colourants industry, expanding global platforms and broadening technologies.
Sofinnova Partners has led a £15.4m Series B round in Green Biologics Ltd, a technology developer and emerging bio-based C4 chemicals producer focused on renewable n-butanol. The funding will allos Green Biologics to strengthen its commercial and technical position and enable the company to execute its plan to bring on stream its first commercial production facility in the US in 2016.

Akemi Chemisch Technische Spezialfabrik GmbH has acquired a 49% stake in Silicone Concepts Pvt Ltd, an India-based distributor of construction-related adhesives, chemicals and machinery. In a two way deal, Akemi has sold a 49% stake in its arm Akemi Technology India Pvt Ltd to Silicone Concepts.

EuroChem Mineral and Chemical Company CJSC and Migao Corporation, a China-based specialty potash fertilizer producer, have formed a 50-50 joint-venture to produce up to 60,000 tonnes of potassium nitrate and up to 200,000 tonnes of chloride-free complex fertilizers per annum in Yunnan, China. A fertilizer production facility is currently being constructed in Yunnan.

Solvay AS is to acquire the specialty chemical assets of ERCA Quimica Ltda. The acquisition will allow the Group to more than double its production capacity in surfactants in Brazil and to serve customers in the agrochemicals, home & personal care, coatings, mining and oil & gas markets.

EcoPhos SA is to acquire the Aliphos feed phosphate business of Tessenderlo Chemie NV. The transaction is a significant step in EcoPhos’s strategy to become a leader in the ecologically friendly production, sale and distribution of phosphate products.

Crown Paints Ltd has acquired three Needlers Ltd decorator merchant centres. The acquisition will assist Crown in its strategy to focus on its core business of hygiene and workwear supplies to the food industry.

Ellsworth Corporation has acquired Halifax Industrial Group Ltd, a UK chemicals company trading as John Burn & Co and Robnor Resins. The acquisition will enable Ellsworth to grow the business further in the UK and Europe.

NorthEdge Capital LLP has backed the management buyout of Fine Industries Ltd, a Teeside-based manufacturer of fine chemicals. The £25m investment will accelerate the capital expenditure programme to increase capacity and support the company’s growth ambitions.

OYAK Yatirim Ortakligi AS has acquired Chemson Polymer Additive AG, a leading producer of polymer additives for the plastics industry. The transaction creates a new, backward-integrated enterprise with clear world market leadership in PVC stabilizers.

Chemicals Sector Comment – January 2014
Frutarom Industries Ltd continues its strong growth strategy with an additional three acquisitions, making a total of four for 2013 and an investment spend of $120m.
Frutarom’s latest acquisition was US flavours business Hagelin & Company Inc for $52.4m, reinforcing its presence in the US and the fast-growing markets of Latin America and Africa as well as expanding its business in the growing beverage flavours sector. Hagelin’s sales turnover totalled $24.2 million in 2012. A couple of weeks earlier, Frutarom enhanced its presence in the Latin American region by acquiring Guatemalan-based Aroma SA – a company engaged in the development, manufacture and marketing of flavours for beverages, dairy products, confectionary, snacks and convenience food.
In November, Frutarom acquired a 75% stake in Russian flavours company Protein Technologies Ingredients Group which specialises in unique savoury taste solutions. Frutarom paid $50.3m for the stake which will bolster its position in the Eastern European markets.
These three acquisitions follow the earlier purchase in May of JannDeRee (Pty) Ltd Co., a South African developer, manufacturer and marketer of flavours with an emphasis on savoury flavours and sweet flavour solutions.
Frutarom will continue to implement its rapid growth strategy, combining organic growth with strategic acquisitions of synergetic companies and activities. Since 1990, Frutarom has acquired 32 businesses.
Deals
Taminco Corp has acquired Kemira Oyj’s ChemSolutions’ formic acid business, including the feed and the airport runway de-icing product lines, for USD 190m. After the divestment which had no synergies to Kemira’s water related core businesses, Kemira will become a purely water-focused chemical company based on Paper; Oil & Mining; and Municipal & Industry.
Sun Chemical Corp has purchased the remaining shares held by Inversiones Mundial (Grupo Mundial) in their Colombian joint venture companies Tintas and Sinclair, specialists in printing ink and related graphic arts products primarily to the packaging market in the Andean region of Latin America. The acquisition reinforces Sun Chemical’s commitment to both the printing ink business and the growing Latin American market.
Israel Chemicals Ltd is to acquire Hagesüd Group, a German producer of premium spice blends and food ingredients for meat processing. ICL’s purchase of Hagesüd will complement its existing ICL Food Specialties’ portfolio of functional ingredients and spice blends for the meat and poultry processing industries, combine know-how and strong brands and expand customer offering.
Braskem SA is to acquire a 70.6% stake in Solvay Indupa SA, a PVC and Caustic Soda producer for USD 290m. The acquisition will establish an industrial presence in Argentina for Braskem and will strengthen the company’s vinyls business and vinyls chain in Brazil and Argentina.
INEOS Group Ltd is to acquire Sasol Solvents Germany GmbH, a leading European solvent manufacturer. The acquisition is a complementary fit with the portfolio and expertise of INEOS and opens up the possibility of integration into its existing manufacturing sites in Germany.
Private equity firm OpenGate Capital LLP is to acquire Benvic®, a leading PVC compounder with three manufacturing plants in Europe, from Solvay SA. The acquisition will be a strategic complement to OpenGate’s portfolio in Europe and is in line with OpenGate’s strategy to further develop its presence in the global PVC industry.
Sika AG is to acquire LCS Optiroc Pte Ltd in Singapore and LCS Optiroc SDB BHD in Malaysia, a leading manufacturer of cementitious powder products. With the acquisitions of AkzoNobel’s Building Adhesives and Everbuild Building Products this year as well as Technokolla in 2011, this take-over strengthens Sika’s offerings in powder products and in the interior finishing sector.
Ferro Industrial Products (Pty) Ltd is to acquire Arkema Resins Proprietary Ltd and Harveys Compostites Proprietary Ltd, two coatings business of Arkema Group SA. Through the divestment, Arkema will sell non-strategic activities such as resins for composite materials, which represent few synergies with the remainder of its coating activities.
Brenntag AG is to acquire Kemira Oyj’s distribution of hydrochloric acid, sulphuric acid and sodium hydroxide business based in Denmark. The divested business is not a focus area for the munipcal and industrial segment of Kemira and the transaction will have a positive impact to the segment’s EBIT margin.
Bayer Cropscience AG is to acquire FN Semillas SA, a start-up company specialised in the breeding, production and marketing of improved soybean seeds in Argentina. This acquisition ratifies the commitment of Bayer CropScience in Argentina and marks the company’s entrance into the national soybean seed market in this country.
Teknos Group Oy has acquired a 40% stake in Manfield Chemical (Changzhou) Co. Ltd paint factory located in Changzhou, China. Manfield Chemical has been the local contract supplier of industrial coating products for Teknos in China since 2011 and the joint-venture will strengthen Teknos’s position in the Chinese market.
Chromaflo Technologies is to combine with the colourants business of CPS Color Group Oy, an integrated tinting specialist. The new colourants and dispersions specialist will operate under the name Chromaflo Technologies and brings together two players in different segments of the colourants industry, expanding global platforms and broadening technologies. Sofinnova Partners has led a £15.4m Series B round in Green Biologics Ltd, a technology developer and emerging bio-based C4 chemicals producer focused on renewable n-butanol. The funding will allos Green Biologics to strengthen its commercial and technical position and enable the company to execute its plan to bring on stream its first commercial production facility in the US in 2016.
Akemi Chemisch Technische Spezialfabrik GmbH has acquired a 49% stake in Silicone Concepts Pvt Ltd, an India-based distributor of construction-related adhesives, chemicals and machinery. In a two way deal, Akemi has sold a 49% stake in its arm Akemi Technology India Pvt Ltd to Silicone Concepts.
EuroChem Mineral and Chemical Company CJSC and Migao Corporation, a China-based specialty potash fertilizer producer, have formed a 50-50 joint-venture to produce up to 60,000 tonnes of potassium nitrate and up to 200,000 tonnes of chloride-free complex fertilizers per annum in Yunnan, China. A fertilizer production facility is currently being constructed in Yunnan.
Solvay AS is to acquire the specialty chemical assets of ERCA Quimica Ltda. The acquisition will allow the Group to more than double its production capacity in surfactants in Brazil and to serve customers in the agrochemicals, home & personal care, coatings, mining and oil & gas markets.
EcoPhos SA is to acquire the Aliphos feed phosphate business of Tessenderlo Chemie NV. The transaction is a significant step in EcoPhos’s strategy to become a leader in the ecologically friendly production, sale and distribution of phosphate products.
Crown Paints Ltd has acquired three Needlers Ltd decorator merchant centres. The acquisition will assist Crown in its strategy to focus on its core business of hygiene and workwear supplies to the food industry.
Ellsworth Corporation has acquired Halifax Industrial Group Ltd, a UK chemicals company trading as John Burn & Co and Robnor Resins. The acquisition will enable Ellsworth to grow the business further in the UK and Europe.
NorthEdge Capital LLP has backed the management buyout of Fine Industries Ltd, a Teeside-based manufacturer of fine chemicals. The £25m investment will accelerate the capital expenditure programme to increase capacity and support the company’s growth ambitions.
OYAK Yatirim Ortakligi AS has acquired Chemson Polymer Additive AG, a leading producer of polymer additives for the plastics industry. The transaction creates a new, backward-integrated enterprise with clear world market leadership in PVC stabilizers.