Clariant agrees US$1.6 billion sale of plastics Masterbatches business to PolyOne
19 Dec 2019 --- Swiss chemical company Clariant has agreed to sell its plastics Masterbatches business to PolyOne, a plastics material and resin manufacturing company, for approximately US$1.6 billion. Clariant’s Masterbatches business offers color and additive concentrates and performance solutions for plastic products, packaging or fibers. The transaction value represents around 12 times the last twelve months reported EBITDA (ending September 2019) on a cash and debt-free basis. This amount is payable at closing, which is expected by Q3 2020.
“This announcement is a significant milestone on our path to focussing on businesses with above-market growth, higher profitability and stronger cash generation,” notes Hariolf Kottmann, Executive Chairman of Clariant. “After the successful divestment of Healthcare Packaging in October 2019, the agreement to sell Masterbatches is an important step in delivering on our strategy defined in 2015 to concentrate on our three core Business Areas: Care Chemicals, Catalysis and Natural Resources.”
“As announced, we are confident that we will execute the remaining divestment of our Pigments business in 2020 in order to build the new, more focused and stronger Clariant by 2021,” he adds.
The proceeds from the intended divestments of Clariant’s non-core businesses will be used “to invest in the company's four technology platforms: Chemistry & Materials, Biotechnology, Catalysis and Process Technology, as well as in customized technical applications,” a Clariant spokesperson tells PackagingInsights.
“With its Business Unit Additives and Catalysts, Clariant will continue to operate in the plastics industry. Business Unit Additives is a major supplier of flame retardants, performance additives and advanced surface solutions for functional effects in plastics, coatings, inks and other special applications, while the Business Unit Catalysts offers high-performance catalysts, for example, for the production of polypropylene,” the spokesperson explains.
As a consequence of the divestment of the Masterbatches business, as well as the anticipated divestment of the Pigments business by the end of 2020, Clariant’s Board of Directors is proposing an extraordinary cash distribution of CHF 3.00 (US$3.06) per share to the Clariant Annual General Meeting to be held on March 30, 2020. Subject to a positive vote of Clariant’s shareholders, the extraordinary distribution of approximately CHF 1 billion (US$1.02 billion) will be paid outpost the closing of the divestment of the Masterbatches business.
The deal with PolyOne comprises two separate transactions. The global Masterbatches business is sold in a deal valued at US$1,500 million, representing around 12.1 times the last twelve months reported EBITDA (ending September 2019).
Separately, the sale of Clariant’s Masterbatches business in India has been approved by Clariant Chemicals (India) Limited’s Board of Directors and is valued at INR 4,260 million (approximately US$60 million, representing around 17.3 times the last twelve months reported EBITDA (ending September 2019).
Clariant Chemicals (India) Limited is listed on the stock exchanges in India with Clariant AG holding a 51 percent controlling stake. The closing of both transactions is subject to customary closing conditions and regulatory approvals.
Clariant’s Masterbatches business offers color and additive concentrates and performance solutions for plastics. Clariant’s Masterbatches help to enhance the market appeal or end-use performance of plastic products, packaging or fibers. In the financial year 2018, the total Masterbatches business generated sales of around CHF 1.181 billion (US$1.20 billion).
Clariant’s EcoCircle
During K 2019 in Dusseldorf, Germany, October 16 to 23, Clariant showcased its concrete action for a circular plastics economy, dubbed EcoCircle. The initiative brings together Clariant’s business-wide competencies and technologies of relevance to mechanical and chemical recycling to screen and develop products with “outstanding circular advantages.”
Importantly, in parallel, EcoCircle provides a platform to facilitate knowledge exchange, customer collaboration and value chain co-creation of ideas on specific circular topics with external partners, from consumers to brand owners, recyclers, resin producers and academics.
Edited by Joshua Poole
