M&As: Arkema acquires German adhesives company; Hillenbrand to acquire the Schenck Process Food and Performance Materials for US$730 mn

Materials firm Arkema’s planned acquisition of Polytec PT will strengthen its Bostik’s product offer to serve the fast-growing batteries and electronics markets. This bolt-on acquisition is part of the group’s strategy to become a full system provider and support its customers to develop sustainable solutions for the batteries and electronics markets. The deal is expected to be finalised in second-quarter 2023. Terms were not disclosed.

Polytec PT, a company based in Germany, develops thermal interface materials for batteries and engineering adhesives for the electronics market. It delivers around EUR15 million sales with one main production site in Karlsbad, Germany.

Polytec PT has developed a strong expertise in thermal interface materials which are key to enable fast charging of the battery and efficient dissipation of the heat. Polytec PT has already built a solid position in this market. This acquisition will also complement Bostik’s product range in engineering adhesives.

The project will enable Bostik to reach a turnover of around EUR50 million after 5 years in these high value applications by leveraging Arkema’s global presence throughout all geographies.

This acquisition is a unique opportunity for Bostik’s and Polytec PT's teams, who are already collaborating on new solutions. It will allow them to accelerate these developments and become a significant player in the thermal interface materials and electronics markets.

In other news, US industrial firm Hillenbrand Inc., which also has machine firm Milacron in its portfolio, has entered into a definitive agreement to acquire the Schenck Process Food and Performance Materials (FPM) business, a portfolio company of Blackstone, for an enterprise value of approximately US$730 million.

The transaction is expected to close during Hillenbrand's fiscal fourth quarter of 2023, subject to regulatory approvals and other customary closing conditions.

Headquartered in Kansas City, Missouri, FPM has over 1,300 global employees and sells to customers in over 150 countries, with approximately 85% of revenues generated in North America. FPM specialises in the design, manufacturing, and service of feeding, filtration, baking, and material handling technologies and systems that are highly complementary to the equipment and solutions currently offered in Hillenbrand's Advanced Process Solutions segment.

FPM is expected to generate calendar year 2023 revenue of approximately US$540 million and approximately US$68 million of EBITDA. Upon closing, FPM will become part of the Advanced Process Solutions segment.

"With this acquisition, we further strengthen our leadership across the attractive, growing end markets of food, durable plastics and chemicals, through strong brands that enhance the breadth of our technology and service capabilities," said Kim Ryan, president and CEO of Hillenbrand. "By combining the applications and systems processing expertise of our Advanced Process Solutions segment with FPM, we will be positioned to offer greater value to our customers and drive scale benefits across manufacturing, engineering, and procurement.

Hillenbrand expects to use cash on hand and cash available under its revolving credit facility to fund this acquisition. Following the close of the transaction, Hillenbrand's projected net debt to adjusted EBITDA ratio is expected to be approximately 3.2x, with a plan to return to its communicated target net leverage range of 1.7x to 2.7x within 15 months after closing.

(PRA)

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