DSM Buys Resins Unit of Avecia

SPECIALTIES

DSM has agreed to acquire Avecia's NeoResins coating resins business for almost $680 million. The deal is expected to be completed in the first quarter of 2005.

The purchase covers the entire NeoResins business and includes the acquisition of shares in 14 legal entities. NeoResins' sales in 2004 are expected to be around $350 million, with operating profits of nearly $70 million.

NeoResins is headquartered in the Netherlands and employs 635 people. It operates plants in the Netherlands, Spain, and the U.S. that make water-based acrylic and urethane resins for paints, coatings, adhesives, and inks. Coatings make up "by far the greater part of sales," Avecia says; total sales for the business have been growing at about 6% annually.

The unit will be known as DSM NeoResins and will become part of DSM Coating Resins. According to DSM officials, the acquisition will add technically advanced resins to the portfolio of DSM Coating Resins, which had sales in 2003 of about $535 million, generated by about 800 employees.

"I am delighted that DSM and Avecia have reached agreement," DSM Chairman Peter Elverding says. "It is exactly the kind of acquisition DSM was looking for to finalize the portfolio transformation envisaged in our Vision 2005 strategy." That strategy led the company to revamp its operations, shedding petrochemicals and other commodities to concentrate on specialized areas such as vitamins and specialty resins.

For U.K.-based Avecia, the sale continues a paring-down process that focuses on biotechnology products and fine chemicals. Earlier this year, Avecia sold its biocides business to Arch Chemicals for about $215 million and its specialty additives business to Lubrizol for an undisclosed amount. Last year, it sold several businesses to Cytec Industries for almost $100 million.