Evonik to sell acrylics business to Advent for EUR3 billion

German speciality chemicals firm Evonik is to sell its methacrylates business to Advent International for EUR3 billion. The selling price (enterprise value) is said to be 8.5 times the business' EBITDA. The transaction is subject to approval by the authorities in several countries and Evonik's supervisory board has yet to sign off on the sale but the deal is expected to close in the third quarter of this year.

The methacrylates business has 18 production sites and 3,900 employees worldwide. From 2016 to 2018, the business generated an average annual EBITDA of about EUR350 million and sales of about EUR1.8 billion per year. For 2019 Evonik expects sales and EBITDA at a similar level.

The division’s products include brands such as Plexiglas and are used in a variety of end markets, including paints and coatings, construction, automotive and healthcare.

The transaction comprises the methacrylates, acrylic products and CyPlus business lines, and some of the methacrylate resins activities. Evonik put these operations on the market as part of its systematic strategy of sharpening its focus on specialty chemicals, which are less cyclical.

Private equity company Advent International is an experienced financial investors in the chemical industry in the world, with more than 30 investments over three decades. According to a Reuters report, Advent had vied for the business with rival bidders SK Capital and a consortium of Triton and Rhone Capital, as well as petrochemicals group Ineos.

Evonik says it will use the sale proceeds to strengthen its balance sheet and, above all, for targeted growth projects. That includes funding the purchase price of the US company PeroxyChem, which Evonik plans to close this year.

In addition, some funds will be used to strengthen the present specialty chemicals portfolio, for example, by building a new polyamide 12 plant in Marl, Germany. These businesses, it says, generate an attractive margin and an above-average cash flow.

Also in 2019 and even without the contribution from the methacrylates business, Evonik says it will be able to cover the dividend payment out of its strong free cash flow.

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