Grace buys Albemarle FCS
W . R . Grace & Co . has agreed to acquire the Fine Chemistry Services ( FCS ) business of fellow US speciality chemicals company , Albemarle . The deal is expected to close in Q2 , subject to regulatory approvals and other customary conditions . This will bring Grace sites at Tyrone , Pennsylvania , and South Haven , Michigan . FCS will fit within Pharma & Consumer , which the company described as “ the largest , fastest growing and most profitable sub-segment ” in its Materials Technologies business . “ This acquisition is strategically and financially compelling and aligns perfectly with our strategy of building a higher growth portfolio by extending our existing capabilities into higher-growth , high-value end markets ,” said Hudson La Force , president and CEO . FCS will expand Grace ’ s existing pharma portfolio of chromatographic resins , excipients and drug delivery , pharmaceutical intermediates and APIs . Grace said that it will “ be better positioned to address customers ’ broad needs as a fully integrated development and manufacturing solutions provider ”. The deal is value at $ 570 million , or 9.5x EBTIDA . This comprises $ 300 million in cash on closing , which is expected to be in Q2 , and the rest by means of issuing nonparticipating preferred equity in a new Grace subsidiary to Albemarle . Grace added that the acquisition will be accretive to its growth rate , EBITDA margin and adjusted EPS in 2021 , adding $ 60 million in full-year run-rate EBITDA . It expects modest near-term cost synergies with greater commercial and capital avoidance synergies over the longer-term . Albemarle is increasingly focused on lithium , bromine and refining catalysts and had previously sought a buyer for FCS , but could not attract the price it wanted . CEO Kent Masters said that the sale “ reflects our ongoing commitment to actively and continuously refine our portfolio as we focus Albemarle on its core , growth-oriented business segments ”.
Solvay furthers its G . R . O . W . strategy
During its annual results presentation , Solvay revealed that it is taking steps to organise its Soda Ash & Derivatives business into a separate legal structure . This is part of the G . R . O . W . strategy , under which the Materials , Chemicals and Solutions segments were each given distinct mandates that reflect the differing dynamics in their markets . “ These steps will reinforce internal financial and operational transparency and accountability , in line with its mandate of optimising cash flow generation and returns , while increasing future strategic flexibility ,” the company said . In January , also as part of G . R . O . W , Solvay had announced 500 job cuts by the end of 2022 , as it seeks to simplify its support functions . This will mean costs of € 170 million , but should lead to incremental savings of € 75 million / year . Together with previously announced plans , the cuts will increase the firm ’ s mid-term cost savings target from the € 300 million announced in November 2019 to € 500 million by 2024 , of which € 175 million was delivered last year . In all , Solvay achieved savings of € 332 million in 2020 . Solvay has also recently sold its interest in six commodity business lines with combined sales of about € 300 million / year . All these should be completed within 1H . During 2020 , Solvay ’ s net sales were down 10 % organically on 2019 , due to the impact from COVID-19 on civil aerospace markets and low volumes in the oil and gas markets . For similar reason , EBITDA was 13.9 % down . Healthcare , personal care , consumer product and electronics were more resilient .
6 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981