Evonik Industries AG signs an agreement with One Equity Partners to acquire US-based PeroxyChem for $625 million. PeroxyChem is a manufacturer of hydrogen peroxide (H2O2) and peracetic acid (PAA).
"We are expanding our portfolio of environmentally friendly and high-growth specialty applications,” says Christian Kullmann, chairman of the executive board of Evonik. “Furthermore, we are getting an attractive business characterized by above-average growth, moderate capital intensity and low cyclicality."
The H2O2 and PAA markets are characterized by versatile applications and above-average growth rates, especially for specialty applications with average annual market growth of around 6%, according to Evonik. PeroxyChem reportedly leverages its H2O2 and PAA to focus on sophisticated, less cyclical markets in the environmental, food safety and electronics semiconductor industries. The company already generates approximately three-quarters of its earnings with specialty applications in these segments, according to Evonik.
"PeroxyChem is highly profitable. With an adjusted EBITDA margin of about 20 percent, profitability is constantly above Evonik’s current group margin,” says Ute Wolf, chief financial officer of Evonik. "As a strong-growing and stable financing business, it also generates an attractive free cash flow."
PeroxyChem expects revenues of approximately $300 million and an adjusted EBITDA of around $60 million for the 2018 fiscal year, according to Evonik. Evonik says it expects synergies across the combined global business of $20 million due to the complementary fit in operations, logistics, expansion of the product portfolio and launch of new technologies. Synergies should be fully realized by 2022.
For more information, visit: www.evonik.com