Arkema reaches another milestone in its journey of growth in specialties with the planned acquisition of ArrMaz. With USD 290 million sales, 18% EBITDA margin and around 2.5% of capex to sales, ArrMaz is a US-based leader in specialty surfactants for crop nutrition, mining and infrastructure.
Integration in Performance Additives Business
The acquisition of this profitable, resilient and low capital intensive business is fully in line with Arkema’s long-term ambition to achieve over 80% of sales in specialties by 2023. ArrMaz will be integrated in Performance Additives, one of the three strong pillars which will drive growth of the High Performance Materials division, along with Adhesives and Technical Polymers.
ArrMaz offers tailored and sustainable solutions for the specific and ever-changing needs of its customers in a variety of industrial markets. Thanks to its formulation expertise and well-established leadership positions, ArrMaz has forged long-term relationships with major industrial customers, leaders in their own fields, to support their development. ArrMaz’s growth is driven by sustainable trends such as limited natural resources, a growing world population, and development of new energy sources.
Extensive Commercial Presence around the World
ArrMaz has built an extensive commercial presence in North America, South America, Asia and in the fast growing regions of the Middle East and Africa, where it recently opened state-of-the-art facilities. It employs 400 employees and operates 9 manufacturing sites around the world.
Combined with Arkema’s strong expertise in formulation and specialty surfactants, this acquisition will join two organizations that are highly complementary in terms of geography as well as commercial and technological capabilities. Arkema will thus be well positioned to accelerate its growth in legacy markets and to enter new segments (additives for nutrients, lithium extraction and oil & gas process aids), with an expectation of delivering above-GDP growth.
Significant and Well-identified Synergies
Beyond ArrMaz’s favorable organic growth profile, significant and well-identified synergies, which are expected to amount to approximately USD 15 million by 2023, support the attractive economics of the acquisition. They will pertain mostly to purchasing and commercial complementarities between Arkema and ArrMaz. Including these synergies and ArrMaz’s organic growth, the enterprise value / EBITDA multiple after 4 years is expected to stand at around 7 times.
Finally, the acquisition is expected to have an accretive impact on cash and earnings per share from the first year of integration, and will contribute to the Group’s 2020 and 2023 objectives. Completion of the transaction is expected in the summer of 2019, subject to approval by relevant antitrust authorities.
Source: Arkema