Arkema announced on Thursday that it is to acquire ArrMaz Products (Mulberry, Florida), a producer of specialty surfactants, from Golden Gate Capital for $570 million.
ArrMaz is a leader in specialty surfactants for crop nutrition, mining and infrastructure with $290 million in sales, an EBITDA margin of 18% and around 2.5% of capex to sales.
Arkema says the acquisition is fully in line with Arkema’s long-term ambition to achieve over 80% of sales in specialties by 2023. The acquisition is expected to have an accretive impact on cash and earnings per share from the first year of integration and will contribute to the group’s 2020 and 2023 objectives.
Arkema expects that ArrMaz’s organic growth will amount to approximately US$15 million by 2023, mainly in the purchasing and commercial fields. The purchase price corresponds to an EV/EBITDA multiple of 10.8x (~7x EBITDA 2023 including synergies).
ArrMaz will be integrated into performance additives, one of the three pillars which will drive growth of Arkema’s high performance materials division, along with adhesives and technical polymers.
ArrMaz provides tailored solutions for its customers in a variety of industrial markets. In the crop nutrition market, ArrMaz offers additives that enhance the efficiency and quality of fertilizer production and distribution and in the mining market; it supplies a wide range of additives to help optimize grade recovery and process performance in mining operations. In the infrastructure market, ArrMaz supplies additives that help improve road longevity and recyclability.
ArrMaz has built an extensive commercial presence in North America, South America, Asia and in the fast-growing regions of the Middle East and Africa, where it recently opened new facilities. The company employs 400 people and operates 9 manufacturing sites worldwide.
Combined with Arkema’s expertise in formulation and specialty surfactants, the acquisition is highly complementary in terms of geography as well as commercial and technological capabilities. Arkema says, it will thus be well positioned to accelerate its growth in legacy markets and to enter new segments (additives for nutrients, lithium extraction and oil & gas process aids), with an expectation of delivering above-GDP growth.
Completion of the transaction is expected in the summer of 2019, subject to approval by relevant antitrust authorities. The Valence Group was Arkema’s adviser.
Source: Arkema
