Evonik says buying Air Products chemicals unit for USD 3.8 bn

German chemical company Evonik said today it was buying a specialised unit of the US company Air Products and Chemicals for USD 3.8 billion.

Evonik said in a statement that the acquisition, to be completed by the end of 2016, was aimed at "strengthening its leading position on the high-margin speciality & coating additives market".

Evonik chief executive Klaus Engel called the market niche a "fast-growth 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," he said.

Evonik said, its combined speciality and coating additives business had annual turnover of around 3.5 billion euros (USD 4 billion), with a core profit margin, as measured by EBITDA (earnings before interest, taxes, depreciation and amortisation), of 20 per cent.
 

It said its activities in the field, particularly for industrial and institutional cleaning products, complemented those of the US company and that "the market for these additives will grow far more quickly than overall demand for chemical products".

The acquisition also expands Evonik's geographical reach beyond Europe to North America and Asia, while creating a more efficient basis for production, logistics and marketing, the company said.

"Evonik expects to generate cost synergies of USD 60 million per year," it said. "These should be fully realised by 2020 at the latest."

Taking research activities into account as well as a leveraging of the two companies' client bases and product portfolios, Evonik said the deal could create annual synergies of USD 80 million.

It said it would finance half the acquisition, which will require approval from the relevant anti-trust authorities, with its own capital and the rest by taking on additional debt.

In its own statement, Air Products said, the sale was part of a plan to focus on industrial gases while shedding non-core businesses.

"As a result of these moves, Air Products will be in an even stronger position to take advantage of the exciting investment opportunities to grow our core Industrial Gases business," chief executive Seifi Ghasemi said.

It said, the unit it was selling, the Performance Materials Division, posted USD 1.04 billion in revenue for the fiscal year ending March 31.