COLOMBES, France—Arkema S.A. has big plans for its Bostik unit, which includes bringing a new technology platform into its repertoire.
The firm has finalized an agreement to acquire sealants manufacturer Den Braven for about $534 million in cash, pending necessary approvals. The transaction would give Bostik, which focuses mainly on high performance adhesives technology, an array of sealant products to market through its global network.
Bostik said in a news release it expects the transaction to close in the fourth quarter of 2016. If completed, Den Braven would be integrated into Bostik, which is part of Arkema's High Performance Materials segment.
“We have a strong ambition for Bostik,” an Arkema spokeswoman said. “Our intention for Bostik is to continue to grow and accelerate the development of this part of Arkema.”
Den Braven estimated its 2016 sales at about $385 million. It employs more than 1,000 and operates eight global production sites—six in Europe, one in the U.S. and one in Turkey. It 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.
The spokeswoman said Bostik currently focuses on high performance sealants through its polymer modified binder technology and that Den Braven brings a wider range of sealant technology to the table.
According to an Arkema presentation on the transaction, Den Braven has a large presence in Europe. Arkema estimated the company had a 12 percent share of the European market, with 58 percent of its sales generated in Western Europe. Only 7 percent of its sales were generated in North America.
About 35 percent of Den Braven's sales came from emerging markets. However, the spokeswoman said this includes Central and Eastern Europe, which combine for 28 percent of the firm's sales. The Middle East, Africa, Asia and the rest of the world combine for 7 percent of the firm's total sales.
Bostik, on the other hand, has about a 30 percent share of its sales in emerging markets, especially in Asia.
Andrew Hinz, a managing director at Grace Matthews which specializes in adhesives, among other markets, said Den Braven is an excellent strategic fit for Bostik. The acquisition will allow Bostik to offer both technology groups to customers in similar end markets—mainly construction and assembly.
Grace Matthews is a middle-market investment bank focused on merger and acquisition advisory services.
“When you think about the fit between the two, it's quite remarkable actually,” Hinz said. “It's very strong. You have Bostik with expertise in adhesives, with a global network of production facilities and a broad network of sales and marketing people. Layering Den Braven's strong portfolio of sealants technologies on top of Bostik's adhesives platform is pretty powerful.”
The spokeswoman said Central and Eastern Europe are considered emerging markets because of projected future regulations that are on tap to match that of Western Europe. These projected energy efficiency requirements will be the main drivers of growth in the building and construction area. The spokeswoman added that for the rest of the emerging markets, growth is projected to come from increased urbanization.
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 and noting the high performance sealants market is forecast to grow 3-4 percent per year.
Eric Linak, senior principal analyst for IHS Market Chemicals' Resins and Coatings Group, said in an email that the adhesives and sealants industry will experience growth of about 5.5 percent annually in China and about 2.5 percent per year in the rest of Asia, excluding Japan.