Evonik is buying Air Products’ Specialties unit

Air Products & Chemicals has agreed to sell its performance materials division to the German specialty chemical maker Evonik Industries for $3.8 billion in cash.

The unit had been earmarked for inclusion in the new firm that Air Products intends to spinoff, Versum Materials. That new firm will now only include Air Products’ electronic materials business.

The performance materials division generated $241 million in pre-tax profits and about $1 billion in sales over the last 12 months ending March 31. The unit’s largest business is epoxy curing agents, which comprises 40% of its sales. Polyurethane additives make up another 32% of revenues and specialty additives, some 28%.

Evonik says these businesses closely intertwine with its own. “With this acquisition, we are expanding our portfolio with precisely the right markets, products, and innovations and continuing to invest in our growth and profitability,” Evonik CEO Klaus Engel says.

For example, Air Products has a strong polyurethane catalysts business, while Evonik is a leader in polyurethane stabilizers. Air Products’ wetting agents for coatings complement Evonik’s paint additives such as dispersants and specialty silica fillers. For the industrial and institutional cleaning market, Air Products’ amine-based surfactants complement Evonik’s oleo chemistry in the same market.

Evonik expects the transaction to eventually generate annual cost and marketing synergies of $80 million. The companies anticipate completing the transaction by the end of this year.

The electronic materials business that will comprise Versum generated $974 million in revenues and $341 million in before-tax profits over the 12-month period that ended on March 31. The new company will offer materials for semiconductor fabrication such as chemical mechanical planarization slurries, deposition precursors, and etching chemicals. Air Products intends to complete the spinoff of Versum to shareholders by the end of September.

The transactions will mark Air Products’ exit from chemicals. “As a result of these moves, Air Products will be in an even stronger position to take advantage of the exciting investment opportunities to grow our core industrial gases business,” says Seifi Ghasemi, Air Products’ CEO.