Evonik completes €3.6bn acquisition of Air Products division

Essen, Germany—Evonik Industries AG has completed its acquisition of the Performance Materials Division of Air Products Inc for $3.8 billion (€3.6 billion).

The firm confirmed in a 3 Jan news release that the transaction has received approval from the relevant antitrust authorities and the integration process is underway. Evonik projects synergies of $80 million once fully integrated.

Air Products said at the time of the transaction that the division produces speciality and coating additives and reported sales of about $1.06 billion and revenue in $241 million of adjusted EBITDA over the last 12 months ending 31 March. It reported $244 million of adjusted EBITDA in fiscal 2015.

Epoxy curing agents accounted for about 40% of revenues, polyurethane additives about 32% and speciality additives about 28%. Air Products said the division consists of about 1,100 employees with major production facilities in the US, Germany, UK, China and Japan. Evonik said the Performance Materials Division consists of 11 production and development locations worldwide.

The transaction financing was completed in September and will consist of Evonik's own funds, with the other half to be financed by bonds. The firm added that since the transaction is partly structured as an asset deal, it will lead to tax benefits of more than $500 million.

"The successful completion of the acquisition paves the way for swiftly merging the activities of Evonik and the acquired units of the Air Products Performance Materials business," Evonik CEO Klaus Engel said in a statement. "It puts Evonik in an excellent position for further profitable growth in the attractive specialty additives market."

Evonik said the business will be integrated into its nutrition and care and resource efficiency segments. Its combined specialty and coating additives business has projected sales of about $4 billion. The firm added that the division is very complementary with Evonik's current product portfolio, serving three primary markets – coating and adhesives additives, polyurethane foam additives and specialty surfactants for industrial and institutional cleaning.

The two firms target the same end customers, but with different products. Evonik said it provides PU foam stabilisers while Air Products is well positioned in PU foam catalysts. Evonik said demand for these products is increasing, with demand for these additives projected to grow more quickly than overall demand for chemical products.

The businesses also complement one another geographically with Air Products focused on the North American and Asia markets and Evonik strong in Europe.

"We are well prepared to ensure a smooth business transition and a successful integration. To this end, we have worked intensively with Air Products over the past few months to develop integration plans," Ralph Sven Kaufmann, Evonik's chief operating officer who is also responsible for the integration, said in a statement.

Based in Essen, Evonik is a specialty chemicals producer with operations in more than 100 countries. It employs 33,500 with sales of $15.4 billion and operating profit of about $2.82 billion.