Evonik to Acquire Air Products Unit -- WSJ
May 07 2016 - 3:04AM
Dow Jones News
By Eyk Henning
FRANKFURT -- Evonik Industries AG has agreed to buy the
performance-materials division of Air Products & Chemicals Inc.
for $3.8 billion, as the German company beefs up its U.S.
operations with the largest acquisition in its history.
Evonik said Friday that the cash deal was expected to generate
$80 million in synergies annually, and to be completed by year-end.
The business, which makes chemicals used in sun lotion and paint,
recorded revenue of $1.04 billion over the 12 months ended March
31.
The announcement confirms a report by The Wall Street Journal in
March that Evonik was in exclusive talks to buy Air Products'
performance-materials unit, which had sales of $245 million in the
quarter ended Dec. 31.
"With this acquisition we are expanding our portfolio with
precisely the right markets, products and innovations and
continuing to invest in our growth and profitability," said
Evonik's Chief Executive Klaus Engel.
Evonik has been vocal about wanting to do a significant deal to
gain size and improve margins for some time. Mr. Engel said in
March that the company continued to seek a large acquisition.
For Air Products, which has a market value of more than $30
billion, the transaction is part of a broader overhaul. Last year,
the company said it aimed to split into two publicly traded
companies; materials technologies, which houses the performance
business, and industrial gases.
The materials technologies unit's remaining operations, which
supply the semiconductor industry, aren't part of the deal with
Evonik. These activities will likely be either spun-off to
shareholders by September, according to Air Products.
Alternatively, the unit could be sold, people familiar with the
matter said.
The Evonik transaction adds to a recent flurry of deal-making in
the chemicals industry.
Evonik earlier this year snapped up French startup biotech
company Alkion Biopharma SAS for an undisclosed sum. Alkion
specializes in herbal ingredients for cosmetic products.
Dow Chemical Co. and DuPont Co. in December agreed to a merger
that would create a giant worth more than $100 billion -- before a
planned breakup. More recently, China National Chemical Corp.
agreed to buy Swiss pesticide and seed company Syngenta AG for $43
billion.
With the deal structure of its latest acquisition, Evonik has
addressed concerns it may overpay for Air Products' assets.
Adjusted for a positive tax effect of $500 million, the German
company is to pay nine times of the operations' annual earnings
before interest, taxes, depreciation and amortization. That
compares with a multiple of roughly 13.7 times that France's Air
Liquide paid for Airgas Inc. last year, according to Dealogic.
Lazard acted as sole financial adviser to Air Products, while
J.P. Morgan Chase & Co. and Valence Group advised Evonik.
Write to Eyk Henning at eyk.henning@wsj.com
(END) Dow Jones Newswires
May 07, 2016 02:49 ET (06:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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