Bostik growing in U.S. with Ashland Performance Adhesives purchase

COLOMBES, France—Bostik S.A. has agreed to acquire Ashland's Performance Adhesives business in a deal that was finalized earlier this month. This acquisition aligns with Bostik's goal of increasing market share as a pure specialty materials player by 2024 and supports its plan to specifically grow its industrial performance adhesives footprint globally.

With its large range of key technologies and well-known brands, Ashland Performance Adhesives has been a player in pressure-sensitive adhesives in the U.S., operating in high-growth applications, and in particular in decorative, protection and signage films for automotive and buildings.

This is what made the company an ideal fit for Bostik.

"The business itself is highly complementary to what we do, and it is also very profitable, which was (appealing)," said Richard Lelievre, senior vice president and head of Bostik's Advanced Packaging Business Unit. With its segment's sustainable and high-performance solutions, its solutions will represent high-tech offerings that will help the company grow in the pressure-sensitive adhesives sectors across the globe, he said.

Ashland also holds significant positions in structural adhesives in the U.S., in particular in segments such as wood bonding for construction, composites and transportation. Wood bonding is a particular need in the U.S. and is another example of the expanded service and product reach that the acquisition will afford France-headquartered Bostik.

"Structural additives is a great market and (Bostik) now more effectively provides global solutions to global OEMs (in those sectors)," said Guillaume Desurmont, senior vice president and head of the Durable Goods Business Unit. This will allow Bostik to complement its positions and benefit from fast-growing demand within major sustainable trends.

Bostik, a world leader in industrial adhesives, was acquired by Arkema in 2015 as part of the parent company's efforts to grow its specialty chemicals business. Bostik had worked with Ashland Performance Adhesives in the past and knew the company offered a wide range of adhesives for flexible packaging, addressing growing demand for more sustainable products.

The two companies maintained a valuable working relationship for many years and previously have partnered on projects, Lelievre said.

The acquisition also allows Bostik to expand its geographic presence in flexible lamination, another growth market for the company.

"We thought for some time there would be an opportunity to partner with (Ashland) so it is not a surprise," Lelievre said. Both companies began discussing an acquisition in April—and given the familiarity between the two organizations, the deal took less than five months to finalize.

Ashland's Performance Adhesives business employs about 330 people and operates six production plants, with five in the U.S. and one in the United Kingdom. Lelievre said all Ashland employees will remain with the company and that all six locations will continue to be used. He added there would be few changes in everyday operations on the employee side and that clients won't notice any difference in service or products.

"We actually (anticipate) being able to grow the business faster than (Ashland) was able to in the past," Desurmont said. As a result, Bostik anticipates the need to hire more professionals to help support increased demand and new business in the months ahead.

The Ashland name will continue to be used in the North American market.

"It's (a brand) that is well-received and we've received great feedback from customers," Lelievre said. "With the expanded technology the group brings, we expect to create more of a one-stop shop for customers that will allow us to be seen as a complete solutions provider."

The acquisition also allows Arkema to upgrade the 2024 profitability target for its Adhesive Solutions segment, which now aims for an EBITDA margin above 17 percent and sales of over $3.5 billion.

As one of the world's largest specialty materials providers, Arkema will continue to search for other strategic acquisitions that will support continued growth in the adhesives market, Lelievre said. The company averages between two and three smaller acquisitions in the adhesives space most years, but this deal was larger in scope compared to most. Desurmont said that acquisitions of this size may happen once every three to four years.

"We have a clear strategy for organic and (acquisition) growth where there are synergies and that will remain our plan," he said. "We're confident this will allow us to (more effectively) sell composites in this industry to global customers."

From a financial perspective, the deal offers significant pre-tax synergies for Arkema, which will be implemented over the next five years. During that time there will be a focus on commercial development of globalized solutions in high growth segments, and procurement synergies through its acrylics business and industrial optimizations.

Ashland had revenues of approximately $360 million in its high-performance adhesive solutions and industrial applications business in 2020.