M&As: Sudarshan Chemical to acquire Heubach Group; Evonik scales down adhesives, healthcare units in restructuring

M&As: Sudarshan Chemical to acquire Heubach Group; Evonik scales down adhesives, healthcare units in restructuring

India’s Sudarshan Chemical Industries Limited (SCIL) has announced that it has entered into a definitive agreement with Germany-based Heubach Group, on its acquisition in a combination of an asset and share deal. This acquisition will create a global pigment company, combining SCIL's operations and expertise with Heubach's technological capabilities. Terms were not disclosed.

Post-acquisition, the combined company will have a broad pigment portfolio of high-quality products and a strong presence in major markets including Europe and the Americas. It will enhance SCIL's product portfolio, giving it access to customers and a diversified asset footprint across 19 sites globally.

Heubach Group has a 200-year history and became the second largest pigment player in the world after its integration with Clariant in 2022. Heubach had over EUR1 billion in revenue in FY21 and FY22, with a global footprint especially in Europe, Americas, and the APAC region.

The group faced financial challenges over the past two years due to rising costs, inventory issues, and high interest rates. SCIL's acquisition of Heubach will address these challenges with a clear turnaround plan.

Commenting on the transaction, Rajesh Rathi, Managing Director of SCIL said, "We are delighted with this transaction that brings together two businesses that will cater to major global markets. We will carefully integrate these two companies to create a truly global pigments company, with Frankfurt remaining a strategically important location. SCIL is known for its agility and efficiency, and we will embed this culture throughout the combined company to make it one of the most customer-centric and profitable pigment companies."

Heubach has a broad and high-quality product portfolio with a large percentage of specialties including customised products. It serves a strong customer base of global blue-chip customers with applications in coating, plastic, inks, automotive, electrical and electronics.

Heubach has 17 manufacturing sites globally providing stability during any geopolitical and supply chain challenges, ensuring long-term relationships with suppliers and customers.

The acquisition is expected to close in 3-4 months, subject to the satisfaction of customary closing conditions, including approvals from regulators and SCIL shareholders.

Meanwhile in other news, German chemical firm Evonik says it is reorganising two business lines to strengthen their growth prospects. Coating & Adhesive Resins and Health Care will focus on and concentrate future investments in their respective core businesses. The remaining businesses outside these cores are to be sold to new owners or incorporated into partnerships. In individual cases, businesses are to be discontinued in a socially responsible manner. In total, businesses affected by these changes generate sales of EUR350 million.

In March, Evonik had announced up to 2,000 job cuts, the majority in Germany, by 2026 to reduce costs by EUR400 million annually. Germany's chemicals industry suffered heavily throughout 2023 due to high production costs and weak demand, and the first signs of recovery seen in the first quarter of this year have begun to fade away.

Evonik adds that its Coating & Adhesive Resins business line will focus on two core areas for growth: liquid polybutadienes as additives for adhesives and sealants or tyres, and specialty acrylics for medical technology and the packaging industry.

The business line's existing polyolefins business, with sales of around EUR100 million, will be transferred to the C4 chain business at Evonik. This will make even better use of the advantages of the existing close supplier relationships of the two units based in Marl (Germany).

In the future, the business will be sold as part of the C4 chain business. The polyester business for coating and adhesive applications is to be sold to new owners. It has around 330 employees globally, in Germany and China. The largest site with around 250 employees is in Witten (Germany). There is also a smaller plant in Shanghai with some 30 employees. The business has annual turnover of around EUR150 million.

“The technological expertise of our polyester business is extensive,” says Lauren Kjeldsen, head of the responsible division Smart Materials. “But to be successfully competing in the long term globally and to generate the necessary margins, investments are needed - and other companies for which polyester is a core business can realize these better than we can.” The search for interested parties is to begin still this year. 

In the future, its Health Care business line will focus on its growth areas: lipids for mRNA and gene therapies, drug delivery systems, and cell culture ingredients. The production of keto acids for pharmaceutical applications in Hanau is to be discontinued at the end of 2025. The approximately 260 employees affected will be actively supported in their search for new options in other businesses within Evonik or outside of the Group. For the sites in Ham (France) and Wuming (China) active in the same business, several strategic options are being evaluated. The entire amino and keto acids business on average generated sales of around EUR100 million in recent years.

CEO Christian Kullmann says: “The realignment of the two business lines exemplifies our approach. By concentrating on our strengths, we can unlock the growth potential that lies within our company.”

(PRA)

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