Arkema to buy Bostik for $2.2 billion

COLOMBES, France—Arkema S.A. has made an offer to Total S.A. to purchase its Bostik S.A. business unit for about $2.2 billion.

Arkema confirmed the proposed bid in a release dated Sept. 19. The transaction is pending regulatory approvals of the antitrust authorities in the countries involved, as well as the legal information and consultation procedure involving the work councils of Arkema, Bostik and Total, Arkema said.

Arkema did not respond to requests for confirmation as to when the transaction would close.

Bostik is a worldwide adhesives manufacturer. The firm reported 2013 sales of $1.92 billion and employs about 4,900 in 40 countries, according to Arkema. Arkema said Bostik would fall under its High Performance Materials segment and, if approved, would boost that segment's sales to 42 percent of the Arkema's total.

Arkema projects its sales to increase to about $9.55 billion and bring its employment to about 19,000 through Bostik. Arkema said the acquisition will have no impact on the current employment levels of both firms.

Arkema is Total's former chemicals arm, spun off from the oil and gas giant in 2004 with its initial public offering on the Paris Bourse in May 2006. It consists of three business segments—High Performance Materials, Industrial Specialties and Coating Solutions.

In 2011, Arkema acquired Total's coating resins unit for about $690 million.

“We couldn't have picked a better parent,” Bob Marquette, president and CEO of Bostik Inc.—the firm's North American business unit—and senior vice president of Bostik, said in an interview following his keynote address at the 2014 Adhesive and Sealant Council Fall Convention and Expo in Greenville, S.C.

“Bostik will remain a standalone entity within the Arkema world,” the executive added. “The chairman of Arkema at one point was the chairman of Bostik, so he knows us quite well. He knows our capabilities; he knows our people. We see this as being a very natural fit and a good step forward in the evolution of the next 125 years of Bostik.”

Arkema said the purchase will be financed by a rights issue of about $439.8 million, the issue of hybrid securities of between about $754 million and $880 million, and a senior bond issuance of a balance between about $628 million and $754 million.

Arkema said the proposed acquisition of Bostik would entail increasing its divestment program of non-core activities representing about $628 million in additional sales, but the firm did not disclose what activities it might divest.

“The complementaries between the two companies, the quality of Bostik's management and teams, the common roots within the Total Group, and the brands and technologies are all factors that will sustain value creation for our shareholders and ensure successful execution of the project,” Thierry Le Henaff, Arkema chairman and CEO, said in a statement.