Solvay Gets Access To Shale Boom With Acquisition Of Chemlogics | October 14, 2013 Issue - Vol. 91 Issue 41 | Chemical & Engineering News
Volume 91 Issue 41 | p. 8 | News of The Week
Issue Date: October 14, 2013 | Web Date: October 10, 2013

Solvay Gets Access To Shale Boom With Acquisition Of Chemlogics

Oil and gas boom: $1.3 billion deal will help Solvay increase sales of specialty chemicals
Department: Business
Keywords: shale gas, oil and gas chemicals, acquisition

Brussels-based chemical maker Solvay has agreed to acquire Chemlogics, a specialty chemical company serving the oil and gas industry, for $1.3 billion in cash. The acquisition, part of Solvay’s strategy to diversify geographically and focus on specialties, will boost access to the fast-growing business of drilling in shale.

Solvay will add Chemlogics to its Novecare business, which sells surfactants, environmentally friendly solvents, and natural polymers used in hydraulic fracturing, or fracking, and other unconventional oil and gas drilling techniques. Chemlogics will bring expertise in friction reducers, emulsion preventers, and extraction technologies.

The acquisition will help expand Chemlogics’ reach across the U.S. and even into China, where Solvay has significant business in the oil and gas industry, according to Novecare President Emmanuel Butstraen. He expects Solvay to post 6% annual sales growth in the $8 billion-per-year U.S. market for oil and gas chemicals. Butstraen also anticipates that the industry in the U.S. will become more heavily regulated, creating a demand for Solvay’s lower-impact chemicals.

Founded in 2002, privately held Chemlogics has its headquarters in Paso Robles, Calif., and has significant operations in Texas. The company employs 277 workers and posted sales of $500 million in the past 12 months. The deal includes three manufacturing sites, eight formulation centers, and six research facilities.

Oil and gas chemicals firms recently have been popular buy-out targets. A year ago, Ecolab bought Champion Technologies for $2.2 billion. Since then, Innospec and the private equity firms Post Oak Energy Capital and Intervale Capital have snapped up smaller players.

The shale energy boom has created a growth bonanza for regional firms that provide proprietary chemical formulations along with on-site services, says Ray K. Will, director of chemical industry consulting at market research firm IHS. Acquiring such firms gives chemical companies “the ability to extract greater value from their products by adding in the access, logistics, and know-how to directly serve customers in shale development.”

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