PolyOne Corp. announced that it had made a deal with Clariant AG to buy its masterbatches business for $1.45 billion. The deal is set for completion in the third quarter of 2020.
The transaction values the Clariant business at $1.56 billion, representing roughly 11.1 times the annual earnings before interest, taxes, depreciation and amortization (EBITDA).
“This will be a truly transformational acquisition for both PolyOne and Clariant customers and employees around the world. Together, we will benefit from the combined…expertise of two global leaders in color design, additive technologies, and sustainable solutions,” says Robert Patterson, chairman, president, and CEO of PolyOne. “With this acquisition and the recent divestiture of our PP&S segment, we now expect over 85% of pro-forma adjusted EBITDA to be generated from specialty applications.”
The deal which includes the sale of Clariant’s worldwide masterbatches business was referred to be valued at nearly $1.6 billion by Clariant in its news release.
Patterson said the difference between the two companies’ numbers is due to accounting differences based on how each firm lists leases.
With the Clariant operations, it will add with 46 manufacturing operations and technology centers in 29 countries and about 3,600 employees. They will be added to PolyOne’s Color, Additives and Inks segment.
“This announcement is a significant milestone on our path to focusing on businesses with above-market growth, higher profitability, and stronger cash generation. After the successful divestment of healthcare packaging in October 2019, the agreement to sell masterbatches is an important step in delivering on our strategy defined in 2015 to concentrate on our three core business areas: care chemicals, catalysis, and natural resources,” says Hariolf Kottmann, chairman of Clariant. “As announced, we are confident that we will execute the remaining divestment of our pigments business in 2020 in order to build the new, more focused, and stronger Clariant by 2021.”
According to Clariant, the proceeds from the divestment of non-core activities will be used to invest in innovations and technological applications within the core business areas.
Clariant’s masterbatches business offers color and additive concentrates and performance solutions for plastics. In the financial year 2018, ended September 2019, the unit generated sales of around $1.15 billion.
The closing of both transactions is subject to all customary closing conditions and regulatory approvals.