Evonik is acquiring the Porocel Group, a catalyst rejuvenation firm, for US$210 million to accelerate the growth of its catalysts business.
The purchase price (enterprise value) is 9.1 times adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in 2019, which is an attractive valuation for a high-quality asset in the catalyst sector.
The transaction is expected to close by the end of 2020 and is subject to approval by the relevant authorities.
Porocel generated sales of approximately US$100 million and EBITDA of about US$23 million in 2019. The EBITDA margin at around 23% is above Evonik’s target range of 18-20%.
Porocel’s global position strengthens the worldwide presence of Evonik’s catalyst activities. The complementary fit to Evonik’s existing catalyst portfolio and especially the available production capacities offer considerable growth opportunities.
Evonik expects to increase sales of the combined catalyst business to significantly more than €500 million by the end of 2025 without the need for investment in new capacities.
“With the acquisition of Porocel we are meeting increasing demand that is coming from a trend towards sulfur-free fuels as well as reducing CO2 emissions and saving resources. The catalyst rejuvenation process results in significantly less CO2 emissions than the manufacture of fresh catalysts, while yielding comparable efficiency and at a much lower cost,” said Claus Rettig, head of the Evonik’s Smart Materials division.
The acquisition gives Evonik access to major customers in the refinery and petrochemicals sector. Porocel’s core competence is an efficient technology for purification adsorbents, sulfur recovery catalysts and hydroprocessing services highlighted by rejuvenation of used desulfurization catalysts.
“Our innovation power driven by the talented team at Porocel is well suited to Evonik’s culture and we look forward to grow the business further together,” said Terence McHugh, president and chief operating officer of Porocel. The transaction will be financed out of Evonik’s strong cash position.
Based in Houston, Texas (USA), Porocel offers a technology for highly efficient rejuvenation of desulfurization catalysts, which are in increasing demand to produce low-sulfur fuel. Rejuvenation reduces carbon-dioxide emissions by more than 50% compared with the production of new desulfurization catalysts. In addition, Porocel has available production capacity, enabling Evonik to speed up expansion of its existing business with fixed-bed catalysts.