M&As: Indorama acquires US PET recycling facility; Clariant to divest pigments business to SK Capital/Heubach Group for US$950 mn

Thailand-headquartered integrated PET maker Indorama Ventures (IVL) has completed its acquisition of CarbonLite Holdings’ facility in Texas as part of the company’s commitment to increasing PET recycling capacity.

Now known as Indorama Ventures Sustainable Recycling (IVSR), the Dallas site is one of the largest producers of food-grade recycled pellets (Recycled Polyethylene Terephthalate or rPET) in the US, with a combined capacity of 92,000 tonnes/year. The facility will recycle more than 3 billion PET plastic beverage bottles/year and support more than 130 jobs directly. IVL is the world’s largest producer of recycled PET for beverage bottles.

With this acquisition, IVL expands its US recycling capacity to 10 billion beverage bottles/year, towards its global target of recycling 50 billion bottles (750,000 tonnes)/year by 2025. The company adds it is investing up to US$1.5 billion to achieve this goal.

Indorama Ventures entered the US PET market in 2003. In 2019, the company acquired recycling facilities in Alabama and California, bringing a circular business model to its US operations. The new acquisition in Texas allows IVL to better serve customers’ increasing need for recycled PET for beverages. America’s leading beverage companies have launched the ‘Every Bottle Back’ project to support the circular plastics economy by reinforcing the value of their fully recyclable PET bottles among consumers.

Indorama Ventures has recycling facilities in Mexico, US, Brazil, France, the Netherlands, Poland, Thailand and from 2022 in the Philippines.

Meanwhile, in other news, Swiss chemical firm Clariant has reached definitive agreements for the divestment of its Pigments business to a consortium of Heubach Group and SK Capital Partners for a deal valued between CHF805 million to CHF855 million (US$950 million) on a cash and debt free basis, depending on an earn-out payment of CHF50 million contingent on the 2021 financial performance of Clariant’s Pigments business. This represents a multiple of 10.7 to 11.4 times the stand-alone adjusted 12-month EBITDA per April 2021 (LTM).

Clariant adds that it will reinvest to become a 20% shareholder alongside Heubach and SK Capital in the ultimate holding company. The combined business will be a global pigments player with approximately 3,000 employees generating more than EUR900 million in annual sales and strong service and production capabilities across the globe. The reinvestment enables Clariant to further benefit from the improving profitability of the Pigments business resulting from the initiated efficiency program and to participate in the future growth opportunities as well as synergies of the combination with the Heubach Pigments business.

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the first half of 2022. The share of the participation in Infraserv Höchst, Germany, attributable to Clariant’s Pigments business is not part of this transaction.

“We are pleased to announce the agreement with Heubach and SK Capital for the sale of our Pigments business. This achievement represents a final step in the divestment program and portfolio repositioning announced in July 2018. We are confident that with Heubach and SK Capital, we have found the right owners of this business, for our customers, our colleagues, and our other stakeholders. Now our focus can fully be on growing revenue and profitability of our core Business Areas: Care Chemicals, Catalysis and Natural Resources”, said Conrad Keijzer, CEO of Clariant.

Johann Heubach, CEO of the Heubach Group, noted, “We have been in pigments for more than 200 years. My late father and I set out to drive consolidation in the pigments industry, and the combination of Heubach and Clariant Pigments is a major milestone in this vision. The fit between Heubach and Clariant Pigments is perfect. The combination of industry leading technologies, a product portfolio serving a wide range of customer requirements and global production and service footprint will give the newly formed Heubach Group the ability to serve our global customer base in the coatings, plastics, inks and specialty applications fields with industry leading products and services.”

Aaron Davenport, a Managing Director of SK Capital, noted, “Clariant Pigments is a premier global colorant solutions provider, and, together with our new partners, the Heubach Group and Clariant, we see a tremendous opportunity to create significant value for all stakeholders.”

Once completed, Clariant will have finalised its intended divestments as part of its portfolio upgrade, having previously divested the Healthcare Packaging and Masterbatches businesses. The pigments divestment concludes Clariant’s transformation into a high value specialty chemical company with above-market growth, higher profitability, and stronger cash generation. The proceeds of the pigments divestment will be used to invest into growth projects within the core Business Areas, execute the strategy along sustainability and innovation, fund the performance improvement programs as well as strengthen Clariant’s balance sheet and fund the reinvestment into the Clariant-Heubach combined Pigments business.

In 2020, Clariant’s Pigments business’s 1,900 employees generated approx. CHF850 million in sales on a stand-alone adjusted basis.

(PRA)

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