German chemical company Evonik Industries AG on Friday said it was buying a specialized unit of the US company Air Products & Chemicals Inc for US$3.8 billion.
Evonik said in a statement that the acquisition, to be completed by the end of this year, was aimed at “strengthening its leading position on the high-margin speciality and 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 about 3.5 billion euros (US$4 billion), with a core profit margin, as measured by earnings before interest, taxes, depreciation and amortization of 20 percent.
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 [US]$60 million per year,” it said. “These should be fully realized 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 US$80 million.
It said it would finance half the acquisition, which would 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.
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