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October 04, 2010 02:00 AM

Omnova thinks big with Eliokem purchase

Mike McNulty
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    FAIRLAWN, Ohio—Omnova Solutions Inc. will significantly increase its size and scale worldwide once it completes the purchase of specialty chemicals producer Eliokem S.A.S.

    The company entered into an agreement with Eliokem parent AXA Private Equity to acquire the Villejust, France-based company for about $300 million. The deal is subject to a definitive agreement, regulatory approvals and other conditions.

    Eliokem produces four latex lines: Pliocord VP latex, Pliocord SB latex, Chemigum latex and Pliolite SB Latex.

    Completion of the transaction is expected by the end of the year. The combination of the two firms would create a chemicals business with annual sales approaching $750 million. When all business segments are included, sales would be more than $1 billion, based on results for the fiscal year that ended in May.

    The deal would bring together operations once owned by two Akron-based tire manufacturing rivals. Eliokem is the former specialty chemicals business of Goodyear, sold in 2001, and Omnova was spun off in 1999 by GenCorp Inc., the former General Tire & Rubber Co.

    Eliokem is a global producer of specialty polymers and chemicals, and a major player in supplying rubber manufacturers with elastomeric modifiers, rubber reinforcing resins, lattices for specialty applications, antioxidants and coating resins. It has plants in Akron; Le Havre, France; Caojing and Ningbo, China; and Valia, India, and employs about 630.

    For its last fiscal year, Eliokem had sales of about $268 million.

    Omnova has no company-owned chemical manufacturing assets outside of the U.S., according to Chairman and CEO Kevin McMullen.

    So the transaction would dramatically change the firm's current manufacturing base overseas.

    Once the sale is complete, an Eliokem spokeswoman said, the company will become part of Omnova's Performance Chemicals business segment, which had sales in the $466 million range in the last fiscal year.

    The acquisition “will transform Omnova into a much larger, more diverse specialty chemical and functional surfaces company with significantly enhanced global capabilities,” McMullen said.

    He said Eliokem was an excellent fit with Omnova's plan to grow in existing markets, enter adjacent markets and globalize the firm's business.

    Eliokem has a strong presence in Asia, with about 40 percent of its sales in higher growth markets there and three manufacturing facilities in the region. The deal would open the door for Omnova to accelerate its specialty chemicals growth in the region, where its Performance Chemicals segment had sales of about $15 million for the fiscal year.

    During the same period, Omnova's sales in Europe were about $30 million, primarily relying on alliances with manufacturing partners in Europe. Eliokem's plant in Le Havre will enable the company to gain improved growth of high margin specialty chemicals, Omnova said.

    Both companies have strong capabilities in polymer development and manufacturing, with Omnova's primary focus on styrene-butadiene-based lattices. Omnova said Eliokem will add complementary technologies and applications to its product base.

    “The Eliokem product lines will deepen our technology portfolios in markets we currently serve, such as oil field and specialty lattices, and will provide exciting growth opportunities in new, but related markets with brands that are already well known and respected,” according to Jim Hohman, president of the Performance Chemicals business.

    Eliokem produces Pliocord VP latex and Chemigum latex at its Le Havre plant in France. The Valia, India, facility also makes Chemigum latex is also, as well as Pliolite SB latex. Pliocord SB latex is manufacturing at the firm's Houston factory.

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