Evonik successfully completed the acquisition of peroxychem

The U.S court rejected the lawsuit filed by the Federal Trade Commission to prevent the acquisition, and the court ruled that the growth rate of environmental protection hydrogen peroxide and peroxyacetic acid products of peroxychem's special hydrogen peroxide business was higher than the market average A few days ago, Evonik industrial group successfully completed the acquisition of peroxychem company in the United States with the investment of $640 million The court in charge in Washington, D.C., dismissed a lawsuit filed by the Federal Trade Commission (FTC) to block the acquisition "For Evonik, this result is gratifying," said Evonik chairman kuleman "In the judgment, the court agreed with our view on the hydrogen peroxide Market, especially the core advantages of PeroxyChem product portfolio in the special application market This acquisition has brought us more opportunities for growth, especially in the environmentally friendly disinfectant Market " Evonik signed an agreement with one equity partners (JPMorgan's private commercial banking unit) in late 2018 to acquire peroxychem Peroxychem is a producer of hydrogen peroxide (H2O2) and peracetic acid (PAA), and has a good market position in the high profit special application field In addition to the United States, other countries' anti-monopoly authorities have approved the transaction But in August 2019, the Federal Trade Commission filed a lawsuit to block the acquisition Bruce Lerner, CEO of peroxychem, expressed satisfaction with the verdict: "despite the market uncertainty, our performance in 2019 is still strong In the challenging economic situation, the company's sales and revenue further increased The business integration of the two companies will motivate employees to develop better solutions for customers " In 2019, peroxychem's sales reached about $300 million, and adjusted EBITDA exceeded $64 million (2018 sales were about $300 million, adjusted EBITDA was about $60 million) Evonik's peroxide business also developed well in 2019 In recent years, Evonik has continued to focus on special chemicals strategically, which has led to the positive development of peroxide business - business revenue has been continuously improved, especially its EBITDA profit margin in 2019 fully meets the overall target range of 18% - 20% set by the company To meet antitrust requirements, peroxychem's plant in Prince George, British Columbia, Canada, will be sold in due course The factory mainly produces standard hydrogen peroxide products For peroxychem and Evonik, the proportion of the factory's revenue to the company's total revenue is negligible "Evonik's financial position improved further last year by divesting its methacrylate business," said ute wolf, Evonik's chief financial officer "According to the plan, we will use part of the proceeds to selectively expand some businesses with high profits, low periodicity, high proportion of special products and strong free cash flow." Thanks to the trend of sustainable development, the market of hydrogen peroxide and peracetic acid is developing well Hydrogen peroxide is an environmentally friendly and resource efficient chemical Hydrogen peroxide has become one of the most pure and widely used chemicals because it can only be decomposed into hydrogen and water in the process of processing Sustainable disinfectants are the main application areas to promote the growth of demand Peroxychem's hydrogen peroxide and peracetic acid businesses focus on end users in the less cyclical environmental protection, food safety and electronic semiconductor industries In this context, peroxychem built a peracetic acid wastewater treatment plant in Memphis, Tennessee in 2019 Based on a long-term supply agreement with the city of Memphis, the plant will begin to generate stable revenue in 2020 The capital expenditure of the plant has been fully covered by peroxychem According to the contract, in view of the successful completion and timely implementation of the project, the acquisition price increased from the initially announced US $625 million to US $640 million In view of the good complementarity between the two companies' global businesses, Evonik expects the combined global business to generate a synergies of $20 million - the same as previously announced figures, especially in terms of operations and logistics, product portfolio expansion and new technology research and development These synergies will be fully realized by the end of 2022 Based on the financial performance in 2019, the acquisition price (enterprise value) including synergies is about 7.6 times of the annual adjusted EBITDA, and 9.9 times without considering synergies The acquisition will have a positive impact on Evonik's adjusted earnings per share and free cash flow in fy2020 The transaction completion date is February 3, 2020 From this date, peroxychem business will be fully integrated into Evonik The acquisition business will be incorporated into Evonik's resource efficiency business segment Consolidation will begin immediately With a history of more than 100 years, peroxychem is headquartered in Philadelphia, Pennsylvania, USA It has about 600 employees and 8 production bases around the world Its main base is in North America It also has production plants in Germany, Spain and Thailand Evonik is one of the world's largest producers of hydrogen peroxide Its active oxide business line has decades of experience in the production of hydrogen peroxide and related products, with 13 production bases around the world About Evonik Evonik, a leading specialty chemicals company in the world Focusing on special chemical business, customer-oriented innovation ability and corporate culture advocating trust and performance constitute the strategic core of Evonik, which promotes its continuous profitable growth and realizes higher corporate value In addition, Evonik's development also benefits from its close customer relationship and market leading position Evonik's business covers more than 100 countries and regions around the world, with more than 32000 employees In fy18, Evonik generated sales of about 13.3 billion euros and operating profit (adjusted EBITDA) of 2.15 billion euros.