Evonik Industries AG acquires the silica business of J.M. Huber for $630 million. Huber’s business is reportedly oriented towards applications in the consumer goods industry while Evonik’s silica business has been focused on industrial applications. Evonik expects to generate synergies of $20 million, largely in the areas of production, logistics and procurement and through harmonization of the product portfolio. The company expects to have all synergy measures implemented by 2021.
“Combining the complementary silica businesses of Evonik and Huber will strengthen an important pillar of our portfolio,” says Christian Kullmann, executive board member for strategy at Evonik. “Also, Huber Silica is an excellent regional fit with its focus on the U.S., China and India.”
For the 2016 financial year, Huber Silica is expected to achieve sales of close to $300 million and an EBITDA (earnings before interest, tax, depreciation and amortization) of $60 million, according to Evonik. The depreciations customarily associated with asset deals will lead to lower future cash tax payments with a net present value of around $80 million, according to Evonik. On this basis, the purchase price (enterprise value) including synergies and tax effects is reportedly about seven times the annual EBITDA, or 10.5 times before tax effects and synergies.
The transaction is scheduled to be completed in the second half of 2017, subject to approval by the responsible authorities. The acquisition is likely to have a positive impact on Evonik’s adjusted earnings per share as early as the first full financial year, according to the company. Financing has been secured through Evonik’s own funds and committed credit facilities.
For more information, visit: www.evonik.de/en
