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Evonik Grows Its Additives Portfolio

Tuesday, May 10, 2016

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Specialty chemicals company Evonik Industries AG seeks to strengthen its position in the specialty and coating additives market by purchasing a division of Allentown, PA-based Air Products and Chemicals Inc.

The proposed deal—valued at $3.8 billion—is expected to close at the end of 2016, subject to regulatory approvals and closing conditions, the Essen, Germany-based company announced Friday (May 6).

About the Unit

Air Products’ Performance Materials Division consists of epoxy curing agents (40 percent of revenues), polyurethane additives (32 percent) and specialty additives businesses (28 percent).

Air Products tank coating
Photos courtesy of Air Products and Chemicals Inc.

Air Products & Chemicals' Performance Materials Division makes epoxy curing agents used in coatings applied to large storage tanks, railcars and in industrial settings because of their durability and chemical resistance.

The unit has 1,100 employees and generates $241 million in earnings before interest, taxes, depreciation and amortization on annual sales of $1.04 billion, according to Air Products.

The business has major production facilities in the U.S., Germany, the UK, China and Japan.

The products are used in a variety of markets including construction, marine, automotive and industrial cleaning.

Agreement Details

Under the terms of the agreement, operational facilities, supplier contracts, labs, contracts, customers, and employees and certain legal entities associated with the Performance Materials Division will transfer to Evonik.

Evonik intends to continue to run operations from Air Products' Allentown headquarters.

An analyst told Bloomberg, the deal “is consistent with [Air Products’] management’s refocus on gas and will cut construction and protective-coatings exposure.

Air Products tank car

Evonik intends to continue to run division operations from Allentown, PA.

Klaus Engel, CEO of Evonik Industries AG, said in a statement that "Air Products’ Specialty & 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.”

Spin-off Planned

In addition to the acquisition, Air Products officials also announced plans to spin-off its Electronic Materials Division to shareholders as a separate public company, called Versum Materials.  

The company says it is on track to separate the division by the end of September 2016 and will continue to evaluate whether debt and equity market conditions are favorable for a tax-free spin-off.

“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,” said Air Products’ Chairman, President and CEO Seifi Ghasemi.

   

Tagged categories: Acquisitions; Air Products; Business matters; Business operations; Coatings raw materials manufacturers; Evonik; Market

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