M&As: Eastman sells adhesives resins to Synthomer for US$1 bn; ASK Chemicals completes acquisition of industrial resin business from SI Group

US materials firm Eastman Chemical Company is to sell its adhesives resins assets and business to UK polymer firm Synthomer for total cash consideration of US$1 billion. The sale consists of hydrocarbon resins (including Eastman Impera tyre resins), pure monomer resins, polyolefin polymers, rosins and dispersions, and oleochemical and fatty-acid based resins product lines. The business is currently part of Eastman’s Additives & Functional Products segment.

To partly fund the cash deal, Synthomer is issuing shares to raise about US$275 million, the London-listed company said, adding that it would also be drawing a new US$300 million debt facility. Earlier this year, Synthomer had bought another chemical firm, Omnova, in an US$824 million deal.

The total sale price represents a multiple of 11 times trailing twelve-month adjusted EBITDA of the adhesives resins business. The final purchase price is subject to working capital and other adjustments at closing. The company expects the sale to be neutral to adjusted earnings per share in 2022.

“Along with the divestiture of the tyre additives business, this sale is part of our effort to improve the performance of the Additives & Functional Products segment,” said Mark Costa, Eastman’s Board Chair/CEO. “We are pleased to reach this agreement and that our adhesives resins business now has a clear path forward. We will continue to focus on leveraging our innovation-driven strategy to grow our specialty businesses within AFP and deliver strong earnings growth.”

“Alongside the diversification of our portfolio, end markets and geographies, our acquisition strategy looks to add new and highly complementary growth opportunities to Synthomer’s global portfolio,” said Calum MacLean, CEO of Synthomer. “Acquiring Adhesive Resins delivers on that ambition, giving us a leading position in the growing global adhesives market and extending our portfolio of differentiated products and sustainable solutions. It is a business that we have long admired, and I am confident that the combination of Synthomer and Adhesive Resins will drive meaningful value for all stakeholders in the years ahead.”

The sale, subject to regulatory approvals and satisfaction of other customary closing conditions, including the consultation of certain employee representatives in the relevant jurisdictions, is expected to be completed in the first quarter of 2022. The agreement contains customary representations, warranties, and covenants of both parties including, among other things, to conduct the adhesives resins business in the ordinary course consistent with past practice.

Beginning in the fourth quarter of 2021 and until sale, the assets of the adhesives resins business will be reported as held for sale.

In other news, ASK Chemicals Group has completed the acquisition of the industrial resins business from US-based SI Group. With this transaction, ASK Chemicals Group, headquartered in Hilden near Düsseldorf (Germany), is strengthening its position as a global supplier of high-performance industrial resins.

ASK Chemicals has purchased SI Group's industrial resins business and associated manufacturing sites in Rio Claro (Brazil), Ranjangaon (India) and Johannesburg (South Africa), as well as licensed technology and concluded multiple tolling agreements worldwide.

With this acquisition ASK Chemicals is reinforcing its position in the foundry market and at the same time taking a first and substantial step in building a phenolic industrial resins business, an attractive market with promising growth opportunities.

The foundry related business will be integrated into ASK Chemicals' foundry division, which is one of the world's largest suppliers of foundry chemicals and consumables. In Brazil, the acquisition does not include any foundry business.

The remainder, and largest part of the business being acquired, serves a wide range of attractive and growing markets and applications such as friction, abrasives, refractory, paper impregnation, insulation and composites.

Both SI Group and ASK Chemicals Group are committed to ensuring that the transition of the business will be seamless. Customers can continue to expect the usual product and service quality in the future, they add.

(PRA)

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