German speciality chemicals producer Evonik (Essen; www.evonik.com) will gain strength in the polyurethane foam additives market with its planned acquisition of the Performance Materials division of US industrial gases giant Air Products and Chemicals (Allentown, Pennsylvania / USA; www.airproducts.com). The takeover plans, which were mooted earlier this year – see Plasteurope.com of 08.03.2016 – reflect Evonik’s plans to expand in the US market.

The Essen-based group will pay USD 3.8 bn (EUR 3.5 bn) for the assets, which are focused on speciality and coatings additives and generated sales of USD 1 bn with adjusted EBITDA of USD 241m in the fiscal year that ended 31 March 2016. The combined activities will have sales of around EUR 3.5 bn and an EBITDA margin of more than 20%. The transaction is expected to be completed by the end of this year, subject to regulatory approval, and Evonik expects it to boost earnings from 2017. Air Products said the business' headquarters will remain at Allentown, Pennsylvania.

The two product offerings, which Evonik said are highly complementary with key positions globally, serve “three particularly attractive, rapidly growing core markets,” targeting the same end-customers but with different products. The combined range includes coating and adhesive additives, along with speciality solvents for industrial and institutional cleaning in addition to PU foam additives. While the German chemical producer regards itself as a leader in PU foam stabilisers, the Air Products business is said to be “well positioned” in PU foam catalysts.

With the acquisition, Evonik said it will “crucially” boost its position in the relevant North American markets. The US business focuses on North America and Asia, while the German player’s focus up to now has been on Europe. By growing on the two new continents, the group said it is “reducing its dependence on the European market and therefore better protecting its own business against fluctuation in individual regions.” Like the Evonik business, the Air Products activities are said to follow a solution-oriented business model driven by “intensive interaction with customers in research and development and outstanding technical service.”

Through optimisation of production/logistics, marketing/sales and administration, Evonik expects the deal to produce cost synergies of USD 60m per year from 2020 at the latest. Altogether, synergies from the combination of assets are projected to reach USD 80m. “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,” said CEO Klaus Engel. The transaction is partly structured as an asset deal, which is expected to lead to tax benefits of around USD 500m.