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January 02, 2020 01:59 PM

Elkem to boost silicone reach in China with Polysil purchase

European Rubber Journal Report
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    Elkem is buying silicone elastomer producer Polysil of China.

    OSLO, Norway—Elkem ASA is acquiring Chinese silicone elastomer and resin material manufacturer Polysil, the Oslo-headquartered company said in a Dec. 30 statement.

    Based in Zhongshan, Guangdong, China, Polysil has a strong position in baby care and food grade silicones, as well as products for the electronics and medical markets, Elkem said in a news release.

    With more than 400 employees, Polysil specializes in the production and development of heat cured rubber, liquid silicone rubber, specialty resins and pressure sensitive adhesives.

    With two production facilities and a research and development center, the privately-owned company generated an operating revenue of about $87 million and an EBITDA of roughly $15 million in 2019.

    Elkem said the acquisition will combine the two companies' complementary product and market positions to create a "platform for further specialization and growth in China and globally."

    "Acquiring Polysil will strengthen our position in selected specialized silicone segments in China," said Elkem CEO Michael Koenig.

    The purchase, Koenig added, will see "considerable synergies" in leveraging Elkem's upstream capabilities to supply raw materials and intermediates to Polysil.

    Polysil has a particularly strong position in the South China market, which accounts for half of all Chinese silicone rubber demand, according to Frederic Jacquin, a senior vice president for Elkem Silicones. The firm said about 90 percent of Polysil's revenues are generated in China.

    Elkem, on the other hand, is present in other parts of China and elsewhere in the world, providing a platform for Polysil's products and further growth. "Elkem's products, knowledge and brand complement the Polysil product range and will benefit Polysil customers going forward," said Hanxi Ma, the largest shareholder of Polysil.

    The acquisition is expected to be completed by end of the first quarter.

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