Clariant to Sell Masterbatch Arms to PolyOne
Business valued at around $1.56 billion
Swiss specialty chemicals producer Clariant has agreed to sell its masterbatch business to US plastics compounder PolyOne for altogether $1.56 billion in a debt-free deal. Important details of the plans were leaked by Bloomberg sources in October.
The Swiss group, which counts as the global market’s leading masterbatch producer, said the deal is set to close in the third quarter of 2020, following all regulatory approvals.
Already a key player, the Clariant cemented its status as leader in the late 1990s when then-chemical major Hoechst merged its masterbatch assets, along with a number of other chemical product segments including pigments, into the Muttenz-headquartered producer and also took a substantial shareholding.
For legal and organizatorial reasons, Clariant’s masterbatch business, which comprises 46 production sites and technology centers employing around 3,600 people, will transfer to PolyOne in two separate transactions. In the first stage, its wholly owned global operations will be sold for $1.5 billion, around 12.2 times the EBITDA recorded in the twelve months up to the end of September 2019.
In the second stage, the masterbatch business of Clariant Chemicals (India), in which the Swiss group holds the 51% majority, will be sold to the compounder for the equivalent of $60 million, or 17.3% times EBITDA taken in during the same 12-month period. The Indian company is listed on stock exchanges in the country.
With the takeover of the Clariant assets, PolyOne – which puts the acquisition sum at $1.45 billion, 11 times EBITDA – will become a world leading supplier of color concentrates for plastics. The company said it intends to finance the purchase through a combination of cash on hand and proceeds from the issuance of senior unsecured notes, along with about $450 million of equity.
The Ohio-based US player is in the process of selling its PVC/PP Performance Products & Solutions (PP&S) business – which primarily supplies the North American construction and automotive industries – to South Korea’s SK Capital Partners for an estimated $600 million in a transaction expected to close by the end of the year.
The deal with PolyOne probably spells an end to Clariant’s earlier plans for a high performance plastics joint venture with Saudi Arabia’s Sabic, the Swiss group’s leading shareholder with a stake of 24.99%.
These plans were called into question in July, allegedly because of unfavorable market conditions.
At the time, the companies said talks would resume when markets improved. However, commentators have at the time they did not see a basis for a joint venture if Clariant sold its masterbatch unit.
With the masterbatch sale and the divestment of healthcare packaging business in October under its belt, the Swiss group plans to use the proceeds to sharpen its focus on its three core areas of care chemicals, catalysts and natural resources.
Executive chairman and former CEO Harriolf Kottmann said he is “confident” that a divestment of the pigments business can be completed during 2020, as a step toward building the “new, more focused and stronger” Clariant by 2050.