- Mergers & Acquisitions
Arkema sells epoxides business to Cargill
Arkema S.A., a specialty chemicals and advanced materials company headquartered in Colombes, near Paris, France, announced the divestment of its epoxides business to Cargill, an American privately held global food corporation based in Minnetonka, Minnesota, U.S.A.
Arkema produces bio-based and specialty epoxides in Blooming Prairie, Minnesota, U.S.A., which is used as additives or intermediates in the manufacture of lubricants, plastic additives and a wide variety of other applications.
The offer received from Cargill values this business at USD38.8 million, which is around 10 times historical EBITDA. The deal is expected to close in the fourth quarter of 2021.
With this proposed divestment, Arkema is pursuing the repositioning of its portfolio on its core businesses, the company said.
Epoxides business has limited integration with rest of Arkema’s portfolio
“Part of Arkema’s Hydrogen Peroxide activity, this business has limited integration with the rest of the Group’s portfolio, generating sales of around USD40 million and employs approximately 45 people,” the company said on its website.
Arkema was created in 2004, when French oil major Total, now TotalEnergies, restructured its chemicals business. Arkema shares started trading at the Paris stock exchange in May 2006.
By joining Cargill, a global player in bio-based-products, the epoxides business will benefit from the size and the development strategy of Cargill, offering new growth potential in the industrial markets, Arkema added.
Arkema’s ambition is to become in 2024 a pure player in Specialty Materials. The Group is structured into three complementary, resilient and highly innovative segments dedicated to Specialty Materials — Adhesive solutions, Advanced Materials, and Coating Solutions — accounting for some 82% of Group sales in 2020, and a well-positioned and competitive Intermediates segment. The Group reported sales of around EUR8 billion (USD9.35 billion) in 2020, and operates in some 55 countries with 20,600 employees worldwide.
Cargill sees growing demand for bio-based industrial products
Cargill said it is acquiring the business as demand for bio-based industrial solutions continues to grow.
“After closing, the investment will give Cargill end-to-end production capabilities in bio-based plasticizers and polyols and enable the company to better serve its industrial customers with nature-derived alternatives to traditional petroleum-based additives,” Cargill said in a statement.
“Industrial customers are increasingly searching for solutions made without petrochemicals, especially in consumer applications where potential concerns around toxicity and sustainability continue to grow,” said Kurtis Miller, managing director in Cargill’s bioindustrial business. “Adding this capability will allow us to innovate across the polyol value chain, transforming our vegetable oil into highly functional compounds that bring benefits like flexibility, durability and heat stability to a wide range of industrial products.”
The acquisition builds on other recent moves by Cargill to expand its presence in the bioindustrial space, including its recent partnerships to build a bio-butanediol facility, its acquisition of specialty beauty ingredient supplier, International Floratechnologies, and, together with its joint venture partner, PTT Global Chemical, develop a greenfield of an integrated NatureWorks facility in Thailand.