Advent to buy Evonik’s methacrylates plastics unit for $3.4bn

May 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

May 2019 Issue

A venture which will create a new independent global market leader for methacrylates, global private equity (PE) investor Advent International Corporation is to acquire the methacrylates plastics unit of German chemicals group Evonik Industries AG in a €3.4bn deal.

The transaction comprises Evonik’s methacrylates, acrylic products and CyPlus business lines, as well as a number of methacrylate resins activities. Evonik placed these operations on the market as part of its systematic strategy of sharpening its focus on specialty chemicals. Evonik’s products are used in a variety of end markets, including paints and coatings, construction, automotive and healthcare.

One of the world leaders in specialty chemicals, Evonik focuses on specialty businesses and benefits specifically from its customer proximity and leading market positions. Active in over 100 countries around the world with more than 36,000 employees, Evonik generated sales of €14.4bn and an operating profit of €2.36bn in 2017.

In a statement, Evonik outlined its intention to use the sale of its methacrylates business to strengthen its balance sheet and target growth projects. This includes funding the purchase price of US company PeroxyChem, a deal which Evonik plans to close this year. In addition, Evonik will channel funds to strengthen its specialty chemicals portfolio; for example by building a new polyamide 12 plant in Marl, Germany. Such businesses generate an attractive margin and above-average cash flow for Evonik.

Rival bidders for Evonik’s methacrylates business were SK Capital and a consortium of Triton and Rhone Capital, as well as petrochemicals group Ineos.

Evonik’s acquirer Advent is one of the most experienced PE investors in the chemicals industry globally, with more than 30 successfully completed transactions over the course of three decades. Founded in 1984, the firm invests in well positioned companies with significant operational and strategic potential. Alongside the management teams of its portfolio companies and a strong global network of sector teams, external industry experts and operational partners, Advent has an extensive track record of executing carve-outs from large industrial companies.

Advent’s activities in the chemicals industry in recent years include allnex, a global leader in resins for the paints and coatings industry, and Oxea, a leading supplier of oxo alcohols and oxo derivatives. In addition, Advent has invested in companies including Viakem, a leading manufacturer of fine chemicals, and GTM, a transnational distributor of chemical raw materials in Latin America.

Drawing on its extensive experience of working with German industrial companies and employee representative bodies, Advent plans to leverage this expertise to partner with management teams to establish Evonik’s methacrylates business as a strong, standalone company. A long-term growth approach, Advent’s strategy is to invest in employees, technology and sites to establish the business as a global leader. Additionally, Advent sees further growth potential through expansion and investment to strengthen the company’s already well-established market position.

“Evonik’s methacrylates business is an impressive technology platform with a well-established market position and very attractive growth opportunities,” said Ronald Ayles, managing partner and global head of chemicals at Advent. “We look forward to working in close cooperation with the highly qualified employees and management team to establish the business as an independent global market leader.”

The Advent/Evonik transaction is expected to close by the third quarter of 2019, subject to customary closing conditions and regulatory approvals.

Fraser Tennant