HOUSTON—Kraton Polymers L.L.C. has completed its purchase of Arizona Chemical Co., a provider of pine-based specialty chemicals.
Kraton previously agreed to acquire Arizona Chemical for $1.37 billion.
“Through the combination of Kraton and Arizona Chemical, we create a global leader in specialty materials technology, manufacturing, and geographical presence, providing value-added products and innovations serving a diversified range of end markets through a broad portfolio of highly-engineered polymers and specialty chemicals,” Kevin Fogarty, Kraton's president and CEO, said in a statement.
“The scale, complementary market positions, attractive margin profile and expected strong free cash flow generation capability of the combined company will serve as a strong foundation for future growth.”
Kraton will turn its focus to the implementation of its integration plan. Fogarty said the firm anticipates $65 million in transaction synergies.
Kees Verhaar, Arizona's former president and CEO, and Frederic Jung, Arizona's former vice president and chief financial officer, will be serving in an advisory capacity to Kraton to help with the transition.
“With the closing of the Arizona Chemical acquisition, the third leg of our three-part strategy, which is principally designed to reinvigorate organic growth, reset our cost structure and capture accretive M&A opportunities, has been realized,” Fogarty said.
“Implementation progress for initiatives relating to reinvigoration of organic growth and the reset of our cost structure continues to advance consistent with our expectations, and 2016 represents an important transition year as we expect to recognize additional strategic milestones that include the startup of our state-of-the-art HSBC capacity expansion in Mailiao, Taiwan,” he added.
This acquisition will assist in deepening customer relationships and expanding Kraton's presence in core markets it shared with Arizona, Fogarty said, such as adhesives, roads and construction, coatings and oilfield chemicals, while providing non-competing and highly complementary products and technologies.
“Moreover, given the renewable nature of Arizona's product and technology offerings, this complimentary growth can be accomplished while reducing our overall exposure to hydrocarbon-based feedstocks,” said Fogarty.