MOSCOW (MRC) -- Croda says it has agreed to acquire the entire issued share capital of flavors and fragrances company Iberchem Group (Murcia, Spain) from investment company Eurazeo for EUR820 million (USD975 million) on a debt-free, cash-free basis, said Chemweek.
The sum will be funded via a combination of Croda's existing debt facilities and the proceeds of a ?600-million ($798 million) equity placing representing 8% of Croda's issued share capital, the company says. Acquiring Iberchem marks Croda's entry into the flavors and fragrances market. The transaction is expected to close by the end of 2020, Croda says.
The acquisition price represents a multiple of 20.5 times Iberchem's estimated 2020 EBITDA, according to Croda. “We have known Iberchem’s team for many years and their business is highly compatible with Croda’s. Iberchem stands out with its significant exposure to emerging markets, extensive product portfolio well placed to adapt to sustainability trends, strong customer focus and R&D capability, and 10-year track record of consistent year-on-year growth. By bringing our businesses together, we are creating a new, full-service offering to our customers in consumer-care markets and a compelling platform from which to grow the combined business in the years ahead,” says Steve Foots, CEO of Croda.
Eurazeo acquired 71.5% of Iberchem in 2017 for EUR405 million, less than half what Croda is paying for the business. Iberchem's management owns the rest of the company. Iberchem's sales have increased at a compound annual growth rate of 15% since 2010, Croda says.
The acquisition will help drive Croda’s objectives by focusing on faster-growing core consumer markets, adding a new, high-growth adjacency to its existing personal-care and home-care businesses, it says. After acquiring Iberchem, Croda will report under four sectors from 2021—consumer care, life sciences, performance technologies, and industrial chemicals. The newly created consumer-care sector will comprise the current personal-care business, the home-care business unit that currently sits within performance technologies, and Iberchem.
Iberchem will operate as an independent entity but with extensive support from Croda, the company says. According to Croda, Iberchem will continue to be led by its current management team, with the CEO of the company, Ramon Fernandez, committing to stay to provide continuity and a smooth transition to Croda.
Iberchem generated €174 million in revenue in 2019, and had EBITDA of EUR34 million, Croda says. It has continued to "trade well" in 2020, despite COVID-19, and its revenue forecast for 2020 is EUR187 million with an EBITDA of EUR40 million, Croda says. Iberchem generates 80% of its sales from fragrances, split evenly between personal-care and home-care products. The remaining 20% of its sales are from flavors. Iberchem has 14 manufacturing facilities and 10 R&D centers across 120 countries.
Croda expects the deal to generate synergies leading to annualized cost reductions of EUR25 million after three years and EUR48 million after five years.
As MRC informed earlier, Croda International (Goole, UK) says it has entered a partnership with Sentient Science (Buffalo, New York), an asset management and software services company, for the recommended use of Croda’s Rewitec additives for wind turbine gearboxes and main bearings.
As MRC informed earlier, Nexam Chemical has received an order from an existing customer in the area of PET additives for deliveries to the USA. The customer is a market-leading manufacturer of PET foam. It is the single largest order in the United States and also one of the largest ever for Nexam Chemical globally. Nexam Chemical has previously delivered products to this customer and this order confirms good growth in the business. The value of the order is SEK 9 million and applies to deliveries up to and including the spring of 2021.
We remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.
Croda acquired Rewitec in 2019 and began to offer to energy technology customers nano- and micro-particle-based additives to increase the durability of machinery by lowering friction and reducing wear, the company says. Prior to the acquisition in 2017, Sentient Science validated Rewitec’s DuraGear gearbox oil additives for use in wind turbine gearboxes, it says.
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