Croda to Take Iberchem for €820 Million

20.11.2020 - UK specialty chemical company Croda has agreed to buy Spain’s Iberchem, marking its entry into the flavors and fragrances market. Croda will pay owner French investment group Eurazeo €820 million on a debt-free, cash-free basis.

Eurazeo paid €270 million in 2017 for a 71.5% stake in Iberchem with the Spanish group’s management retaining ownership of the remaining shares.

“We have known Iberchem’s team for many years and their business is highly compatible with Croda’s,” said Croda CEO Steve Foots. “Iberchem stands out with its significant exposure to emerging markets, extensive product portfolio well placed to adapt to sustainability trends, strong customer focus and R&D capability, and 10-year track record of consistent year-on-year growth. By bringing our businesses together, we are creating a new, full service offering to our customers in consumer care markets and a compelling platform from which to grow the combined business in the years ahead.”

Croda will fund the acquisition from a combination of existing debt facilities and an equity placing of about 8% of its issued share capital with proceeds amounting to approximately £600 million. The transaction is expected to close by the end of 2020.

Headquartered in Murcia, Iberchem posted revenues of €174 million in 2019. It operates 14 manufacturing facilities and has 10 R&D centers worldwide with about 850 employees.

Approximately 80% of Iberchem’s sales are fragrances for personal care and home care products, areas where it has a similar customer profile to Croda. Roughly a further 20% of sales are generated by its Scentium flavours business, principally for food, pharmaceutical and oral care applications.

Croda said it will gain access to customers in countries where it has historically been under-represented, such as in the Middle East, North Africa, and parts of Asia and Latin America.

The integration of Iberchem’s R&D and sales teams within Croda’s global network is expected to yield synergies that will lead to annual cost reductions of at least €25 million after three years and €48 million after five years.

Iberchem will continue to operate as an independent entity but with extensive support from Croda. Following the acquisition, and from 2021, Croda will report under four sectors – consumer care, life sciences, performance technologies and industrial chemicals.

The newly created consumer care sector will comprise the existing personal care business, the home care business that currently sits within performance technologies and Iberchem.

Author: Elaine Burridge, Freelance Journalist