FAIRLAWN, Ohio-Omnova Solutions Inc. has completed the purchase of Elio-kem S.A.S. to create a larger, more diverse global chemical and functional services company.
Omnova acquired the specialty chemicals producer from AXA Private Equity in December for about $302 million before subtracting Eliokem's net debt.
Eliokem, based in Villejust, France, eventually will become part of Omnova's Performance Chemicals business. The operation will be significantly enhanced and more diversified because of the acquisition, according to Jim Hohman, pre- sident of the Performance Chemicals division. He will remain president of the combined division.
“It contributes to all three of our company's strategic objectives by providing entry into several new higher growth markets, expanding our portfolio of value-added technologies and significantly broadening our global manufacturing footprint,” said Kevin McMullen, chairman and CEO of Fairlawn-headquartered Omnova.
Higher growth markets
About 75 percent of the markets Elio-kem serves are new to Omnova, according to Hohman, although the raw materials and processes used by each firm are the same or similar.
He said that over time the Eliokem name will be eliminated but its strong product brands will be maintained.
Eliokem gives Omnova manufacturing capabilities in Europe and Asia, which complement Omnova's strong production presence in the U.S., he said. “The combination of the two companies will increase our participation in higher growth markets and applications,” he said, adding that both firms have similar operating styles.
A number of new acrylic, styrene-butadiene and nitrile chemistries and applications, including coating resins, elas- tomeric modifiers, antioxidants, specialty rubbers and reinforcing resins, will become part of Omnova's portfolio, as well as complementary products for oil field and specialty latex applications.
Operating under private equity ownership since it was divested by Goodyear 10 years ago, Eliokem will benefit from being owned by an operating specialty chemicals company with a long-term commitment to its markets and customers, Hohman said.
“There will be greater access for Elio-kem's products in the U.S. market, and broader, deeper technologies and resources to enhance the solutions both entities can provide to customers worldwide,” he said.
Prior to the acquisition, Omnova's Per- formance Chemicals business had sales offices and technical service laboratories in Asia and Europe and it served the international market through exports from the U.S. and regional toll manufacturing relationships.
Because Eliokem adds global manufacturing to the mix, growth of Omnova's global chemicals business will accelerate, he said.
Eliokem's plants are located in Le Havre, France; Ningbo and Caojing, China; and Valia, India; while Omnova operates five chemical production operations in North America.
Eliokem has a facility in Akron that will be operated as an integrated plant with Omnova's nearby Mogadore, Ohio, site, Hohman said. “Each plant has unique capabilities that are critical to our future plans, and both have very capable people.
“In time, Akron-area Eliokem employees involved in R&D and application development will be relocated to Omnova's Technical Center in Akron.”
In addition, the acquisition of Eliokem is expected to provide savings in manufacturing, logistics and purchasing costs by leveraging the resources of the two companies, according to McMullen.
The Performance Chemicals business will remain based in Fairlawn, with global manufacturing and management of product lines structured regionally in North America, Europe, India, the Middle East and Asia.
In terms of personnel, Hohman said Omnova officials have been impressed with the talent at Eliokem and most of the management team will be part of the combined company.
“Staffing at our international sites will remain essentially the same for the time being, and we are currently assessing our needs in the U.S.,” he said.
McMullen projected that the more diversified Performance Chemicals business coupled with the firm's Decorative Products functional surfaces operation will give Omnova sales of about $1.1 billion annually, based on revenues generated for a 12-month span ending in August.
“Over 40 percent of those sales will be outside the U.S.,” he said.