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May 09, 2016 02:00 AM

Evonik acquires Air Products' coating additives business

Rubber & Plastics News Report
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    ESSEN, Germany—Evonik A.G. has acquired the Performance Materials Division of U.S. based Air Products and Chemicals Inc. for $3.8 billion in cash, Evonik said in a news release.

    Air Products said the division produces specialty and coating additives and reported sales of about $1.06 billion and revenue in $241 million of adjusted EBITDA over the last 12 months ending March 31. It reported $244 million of adjusted EBITDA in fiscal 2015.

    Evonik said it projects cost savings of about $80 million both through cost synergies and revenue synergies, realized by 2020. It added that the transaction is structured as an asset deal, leading to tax benefits of more than $500 million.

    Epoxy curing agents accounted for about 40 percent of revenues, polyurethane additives about 32 percents and specialty additives about 28 percent. Air Products said the Performance Materials Division consists of about 1,100 employees with major production facilities in the U.S., Germany, U.K., China and Japan. Evonik said the Performance Materials Division consists of 11 production and develop locations worldwide.

    Air Products, in a separate transaction, is also spinning off its $974 million Electronic Materials Division, which produces materials for the semiconductor industry.

    “Evonik is already one of the leading producers of specialty and coating additives,” Evonik CEO Klaus Engel said. “Air Products' specialty and coating additives business perfectly complements this fast-growing segment. With this acquisition, we are expanding our portfolio with precisely the right markets, products and innovations and continuing to invest in our growth and profitability.”

    Evonik said Air Products' business will be integrated rapidly into its nutrition and care and resource efficiency segments. It's combined specialty and coating additives business has projected sales of about $4 billion.

    The newly acquired business is very complimentary with Evonik's current products, the firm said, and the combined business serves three primary markets—coating and adhesives additives, polyurethane foam additives and specialty surfactants for industrial and institutional cleaning.

    Evonik said they target the same end customers, but with different and complimentary products. Evonik provides PU foam stabilizers while Air Products is well positioned in PU foam catalysts. Evonik said demand for these products is increasing, with demand for these additives projected to grow more quickly than overall demand for chemical products.

    Evonik added that the two businesses compliment one another geographically. Air Products' main focus is in North American and Asia while Evonik is strong in Europe. The acquisition allows Evonik to boost its standing in the North American and Asia markets while reducing its dependency on Europe.

    Evonik is a Germany-based specialty chemicals producer with operations in more than 100 countries. It employs 33,500 with sales of $15.4 billion and operating profit of about $2.82 billion.

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