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Chemicals company Evonik acquires Air Products’ Performance Materials Div.

Evonik Industries AG (Essen, Germany) announced today that it is acquiring the specialty and coating additives business, Performance Materials Div., of Air Products and Chemicals Inc. (Allentown, PA) for $3.8 billion. The acquisition will strengthen its position in the high-margin specialty and coating additives market, said Evonik. The transaction is intended to be completed by the end of the year.

Evonik anticipates rapid integration of the business into its Nutrition & Care and Resource Efficiency segments that, the company says, are experiencing solid growth. The combined specialty and coating additives business has a turnover of around €3.5 billion ($4 billion) and an attractive EBITDA margin of more than 20%, according to Evonik.  

The two businesses serve three rapidly growing core markets, said Evonik in a news release: Coating and adhesive additives, high-value polyurethane (PU) foam additives and specialty surfactants for industrial and institutional cleaning. They target the same end customers, but with different and complementary products. For instance, Evonik is a leader in PU foam stabilizers while the specialty and coating additives business of Air Products is well positioned in PU foam catalysts. Demand for these products is rising strongly, and the market for these additives will grow far more quickly than overall demand for chemical products, said Evonik.

The companies are also geographically compatible, as the Air Products business is focused on North America and Asia, while Evonik’s strength is in Europe. Moreover, by growing its presence in North America and Asia, Evonik is reducing its dependence on the European market and protecting its business from economic fluctuations in individual regions.

Evonik expects to generate cost synergies of $60 million per year, which are expected to be fully realized by 2020 at the latest. In addition, Evonik expects to achieve revenue synergies by combining innovation activities, leveraging the respective client bases and product portfolios, and taking advantage of geographical adjacencies. In total, the deal is expected to generate annual synergies of $80 million, according to Evonik.

The planned acquisition remains subject to formal approvals from the relevant antitrust authorities.

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