Elkem ASA has entered into an agreement to acquire Polysil, a leading Chinese silicone elastomer & resins material manufacturer with strong positions in baby care and food grade silicones, as well as silicone products for the electronics and medical markets.
The companies have agreed an enterprise value for Polysil of up to RMB 941 million ($135 million), including potential bonus and earn-out depending on pre-agreed criteria.
Completion of the acquisition is subject to final regulatory approvals. Closing is expected by end of first quarter 2020.
“Acquiring Polysil will strengthen our position in selected specialised silicones segments in China. There are considerable synergies in leveraging Elkem’s upstream capabilities to supply raw materials and intermediates, and in combining both the product portfolio and the domestic and global market positions of Polysil and Elkem,” says Michael Koenig, CEO of Elkem.
Approximately 90 per cent of Polysil’s revenues are generated in China, primarily in South China. Elkem’s presence and positions in other parts of China and internationally provide a solid platform for Polysil’s products and for further growth.
“Elkem’s products, knowledge and brand complement the Polysil product range and will benefit Polysil customers going forward,” says Hanxi Ma, the largest shareholder of Polysil.
“There is significant potential in utilising Polysil’s high-end liquid silicones rubber and pressure sensitive adhesives specialty positions and in further developing both products and markets. Polysil’s strong research and development capabilities will be very important for development of products for both the Chinese market and globally,” says Frederic Jacquin, Senior Vice President Elkem Silicones.
Polysil is a privately owned company with more than 350 employees located in Zhongshan in Guangdong, China. The company has leading technology positions in production and development of Heat Cured Rubber (HCR), Liquid Silicone Rubber (LSR) and specialty resin and Pressure Sensitive Adhesives (PSA). Polysil has two production facilities and a research and development centre with more than 50 engineers.
Polysil is estimated to generate a total operating revenue of RMB 612 million ($88 million) in 2019 with an EBITDA of RMB 110 million ($16 million).
In connection with this transaction, Elkem was advised by Alantra, Wikborg Rein Advokatfirma AS, and EY, whilst the sellers were advised by Han Kun Law Offices.
Source: Elkem