AVON LAKE, Ohio—Avient Corp. is looking ahead after wrapping up its $1.4 billion deal for the masterbatches unit of Clariant A.G.
"This is part of a long-term portfolio shift," Robert Patterson, Avient chairman, president and CEO ,said in a phone interview. "Packaging, consumer and health care made up 75 percent of Clariant's (masterbatch) sales. And the pandemic has highlighted the importance of food and beverage packaging going forward."
Avon Lake-based Avient completed its acquisition of the business on July 1, the same day that it changed its name from PolyOne Corp. The Clariant deal adds 46 manufacturing sites and technology centers in 29 countries and about 3,500 employees to Avient's previous total.
The business being acquired has annual sales of $1.1 billion. It will operate as part of Avient's Color, Additives and Inks unit.
"There was a pretty small overlap in customers, even though we were both leading suppliers in the industry," Patterson said. "We both serve multinational OEMs and are strong in certain geographies."
Avient now will designate centers of operational excellence among its plants, where Patterson said the firm "can invest for the greatest benefit from a technology standpoint." He added that Clariant's masterbatch employees "are thrilled to be joining our company."
"The masterbatch business had been for sale for a number of years because it wasn't viewed as core," Patterson said. "So there's a general upside to employee morale and customer service to be part of an organization that wants you. There's a lot of excitement and energy around what we're doing."
The timing of the acquisition played a role in the name change.
"We're bringing two market-leading organizations together and are focused on being the best organization together," Patterson said. "The name change played a huge role in sending the message that we're sincere in that regard."
Like many aspects of business in 2020, the Avient-Clariant deal was affected by the COVID-19 pandemic.
"We met with Clariant leadership four times before COVID hit, so we had already established relationships," Patterson said. "It's clear that masterbatch performed well during the pandemic. That part of the industry is essential to response and recovery efforts. That's another testament to why we bought the business."
Avient's second-quarter sales were down almost 19 percent as a result of the pandemic, but Patterson said a recovery is under way.
"First, I have to say that our hearts go out to all of those impacted by COVID-19," he added. "We have a lot of gratitude for our frontline workers and first responders. The world is entrenched in the pandemic, but green shoots are emerging of long-term value creation. We might see more flexible work arrangements with fewer people in offices.
"We can run in our current work environment but what's missing is the human element," Patterson said. "That's very important for growing our business and finding new customers."
The $60 million in synergies expected from the Avient-Clariant deal "can be captured even in a COVID environment," Patterson said.
The newly named company also "can rebound with a focus on sustainability, from the standpoint of lighter weight, more recyclable products and more recycled content, he added.
Stock analyst Frank Mitsch of Fermium Research in New York took a positive view of the Avient-Clariant deal in a recent research note.
"While still (in the) early days and management (is) reticent to go into too many details, we were heartened to hear that there could be 'considerable upside to the $60 million of synergies,' with sourcing a logical first step," he wrote. "The added exposure to Asia as well as more specialty end markets are serving to make the deal look better than when initially announced."
For the first half, Avient saw sales slide almost 12 percent to $1.32 billion, as first-half profit increased 23 percent to $56.1 million.
Avient is one of North America's largest compounders and concentrate makers and one of the region's largest resin distributors. The firm employs 9,100 worldwide and posted pro forma sales of $4 billion in 2019.