Europe Conditionally OKs Evonik Silica Buy
The European Commission has granted its approval to German specialty chemical firm Evonik’s $630 million acquisition of Huber Silica (Edison, N.J.), but the green light comes with conditions.
The acquisition, announced in December 2016, is part of a move by Evonik (Essen) to expand its presence into North America and Asia. The company says U.S.-based Huber Silica would also help develop Evonik’s portfolio and strengthen the growth of resource efficiency.
Evonik, a leading global manufacturer of specialty chemicals, supplies silica for the paints and coatings industry as well as the tire industry and other sectors. J.M. Huber currently employs a total of 4,000 workers, including 700 in its silica business, which occupies six locations.
The European Commission was originally notified of the transaction on April 27.
Because both companies manufacture specialty chemicals, including precipitated silica, the European Commission expressed some concerns about market competition for precipitated silica for toothpaste and defoamer applications, and hydrophobic precipitated silica, which is also used in defoamers as well as paints and coatings.
This results in reasonably high combined market shares for Evonik, and in these markets, there are a limited number of alternative suppliers. Evonik’s acquisition of Huber would also restrict competition in these sectors.
To address the European Commission’s concerns, Evonik and Huber Silica proposed the following divestments:
According to the European Commission, the divestment will include full transfer of production technology, and the parties must provide full technical support to the purchaser. To ensure transaction success, the purchaser must be an established producer of and have a market for precipitated silica within the EEA.
Huber has said that the sale of its silica business would not impact the other sectors within the company, which includes fire retardant additives and ground calcium carbonate.
Assuming there are no future issues with the acquisition, Evonik has said it anticipates completion of the transaction in the second half of 2017. Approval by the commission remains conditional until the companies are in compliance with the commitments they've made.