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July 21, 2016 02:00 AM

Bostik to acquire Den Braven for $534 million

Chris Sweeney
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    COLOMBES, France—Arkema S.A.'s Bostik unit has finalized an agreement to acquire adhesives and sealants manufacturer Den Braven for about $534 million in cash, pending necessary approvals.

    Bostik said in a July 20 news release it expects the transaction to close in the fourth quarter of 2016. Den Braven is estimating its 2016 sales at about $385 million and consists of more than 1,000 employees and eight global production sites—six in Europe, one in the U.S. and one in Turkey.

    Den Braven manufactures sealants using a variety of technologies—including silicone, polyurethanes and polyurethane foams. Arkema projects about $33 million of annual cost synergies once the unit is fully integrated into Bostik.

    According to an Arkema presentation on the transaction, Den Braven has a large presence in Europe, specifically Eastern and Central Europe. Arkema estimated Den Braven had a 12 percent share of the European market with 58 percent of its sales generated in the region.

    The presentation also outlined that 35 percent of Den Braven's sales came from “emerging markets,” classified as Central and Eastern Europe, Middle East, Africa, Asia and the rest of the world. This did not include North America, which accounted for the remaining 7 percent of sales.

    Bostik said Den Braven's technology will help accelerate its growth thanks to the excellent entry point in emerging countries that these new products represent, specifically citing Asia as a region of focus.

    “The excellent geographic, technological and commercial fit will help create a global leader in the high performance sealants market, which grows on average at 3 to 4 percent a year, supported by new regions to improve the energy efficiency in buildings and by the growing use of these products in emerging countries,” Bostik said in a news release.

    Arkema said the acquisition helps further its goal of developing its High Performance Materials segment, which it hopes will account for 50 percent of the company's total sales by 2020. The firm reported $8.46 billion in sales for 2015, of which High Performance Materials accounted for about $3.7 billion—or 43.7 percent, easily making it the largest business segment. Integrating Bostik accounted for $1.65 billion in sales over 11 months and caused the segment's total to jump 94.1 percent compared to 2014.

    It also wants to double Bostik's EBITDA by 2020 compared to its 2014 figure and has been busy investing in the unit. So far in 2016, Bostik expanded its polymer modified binder technology with a new plant in Helsingborg, Sweden, and an expansion in Sremban, Malaysia.

    The firm operates two other business segments—Industrial Specialties, at $2.7 billion was about 32 percent of Arkema's 2015 sales; and Coating Solutions accounting for the remainder $2.03 billion.

    Arkema employs about 19,000 with operations in nearly 50 countries.

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