M&As: Evonik sells superabsorbents business to ICIG; Sumitomo Chemical sells equity in Sumika Color to Nippon Pigment

German speciality chemicals firm Evonik is selling its superabsorbents business to the International Chemical Investors Group (ICIG). The purchase price (enterprise value) is in the low triple-digit million euro range. The agreement also includes the assumption of pension obligations by ICIG. The final transfer of the business is planned for mid-2024 following approval by the relevant competition authorities.

"In terms of its profile, the superabsorbents business no longer fits our character as a specialty chemicals company," says Christian Kullmann, CEO of Evonik. "We have sought and found a reliable investor for it. Our company is thus taking the second step in the divestment of our Performance Materials Division."

ICIG is an experienced chemical investor based in Frankfurt am Main, Germany. With more than 6,200 employees, the group generates annual sales of over EUR4.6 billion. ICIG has extensive expertise in the development of sites and business units that are no longer part of the core business at corporate groups. In April 2023, ICIG had already acquired the Luelsdorf site and associated businesses in Wesseling from Evonik and announced extensive investments there. Like the superabsorbent business, the site previously belonged to the Performance Materials Division. Its third part are chemicals from the C₄ chain, a business that is also up for sale.

Superabsorbents are powdered polymers used as absorbent materials in diapers and other hygiene products. The business to be sold generated sales of €892 million in 2023, with adjusted EBITDA in the mid double-digit million euro range. On average over the past five years, it had achieved an adjusted EBITDA of around €20 million. ICIG is taking over the entire business with around 1,000 employees and superabsorber production facilities in Krefeld and Rheinmuenster, Germany, as well as two locations in the U.S. in Greensboro, North Carolina, and Garyville, Louisiana. The business also includes plants in Marl, Germany, for production of acrylic acid, the most important raw material for superabsorbents.

Meanwhile in other news, Sumitomo Chemical Co has decided to transfer its shares in Sumika Color Co to Nippon Pigment Company and concluded a share transfer agreement with Nippon Pigment. The transfer is scheduled to take place on 30 April 2024.

Sumika Color has engaged in the organic pigment, masterbatch, and resin compound businesses for many years. These businesses are facing a challenging business environment, including maturing markets in Japan and sharply rising raw material and fuel prices.

After exploring how to restructure the businesses, Sumitomo Chemical has decided to transfer its share in Sumika Color, concluding that the best owner for Sumika Color is Nippon Pigment, which has strengths in high-dispersion technology, colourant and additive formulation technology, as well as production technology, and that Nippon Pigment’s ownership of the business will be the best way forward to enhance Sumika Color’s efficiency and maintain and strengthen its competitiveness.

Sumitomo Chemical Group adds it is currently accelerating the restructuring of its businesses as part of its short-term intensive performance improvement measures, based on profitability and the best-owner perspective.

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