Clariant agrees to sell Masterbatches business to PolyOne

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Clariant stand at K2019
The Clariant stand at K2019 in Dusseldorf Photo:PSA

The transaction values the Masterbatches business at US$ 1.56 billion, representing c. 12.2 times the last twelve months reported EBITDA (ending September 2019) on a cash and debt free basis according to the Clariant press release. However, the PolyOne website press release states, “The combined net purchase price is US$ 1.45 billion, representing an 11.1x multiple of last twelve months adjusted EBITDA, or 7.6x including anticipated synergies.” The purchase amount is payable at closing, which is expected by Q3 2020. The seeming discrepancy might be explained by the separate deal for US$ 60 million for the Clariant Chemicals India a listed company in India in which Clariant holds 51% stake. At the recent K2019 exhibition in Dusseldorf it was made clear that Clariant was divesting its entire Masterbatch business, including Clariant Chemicals India.

“This announcement is a significant milestone on our path to focussing on businesses with above-market growth, higher profitability and stronger cash generation. 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”, said Hariolf Kottmann, Executive Chairman of Clariant. “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 added.

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 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 approx. CHF 1 billion will be paid out after the closing of the divestment of the Masterbatches business.

According to the press notice on the PolyOne Corporation website, Robert M. Patterson, chairman, president, and Chief Executive Officer, PolyOne Corporation said, “This will be a truly transformational acquisition for both PolyOne and Clariant customers and employees around the world. Together, we will benefit from the combined ingenuity, passion and expertise of two global leaders in color design, additive technologies and sustainable solutions.”

PolyOne will host a webcast on 19 December 2019 at 9:00 am EST (Indian stand time 7:30 pm). There will be a brief question and answer session following the company’s prepared remarks.

Separate deal for Clariant Chemicals India

The deal with PolyOne comprises two separate transactions. The global Masterbatches business is sold in a deal valued at USD 1.5 billion, representing c. 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 Indian Rupees 426 crore or approximately US$ 60 million, representing c. 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% 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.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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Editor of Indian Printer and Publisher since 1979 and Packaging South Asia since 2007. Trained as an offset printer and IBM 360 computer programmer. Active in the movement to implement Indian scripts for computer-aided typesetting. Worked as a consultant and trainer to the Indian print and newspaper industry. Visiting faculty of IDC at IIT Powai in the 1990s. Also founder of IPP Services, Training and Research and has worked as its principal industry researcher since 1999. Author of book: Miracle of Indian Democracy.

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