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Mergers & Acquisitions

AkzoNobel will sell chemical division to the Carlyle Group and GIC for $12.5 billion

New owners say they are looking to expand the business

by Alex Scott
March 30, 2018 | APPEARED IN VOLUME 96, ISSUE 14

 

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Credit: AkzoNobel
AkzoNobel’s chemical business makes a broad range of products, including high-purity salt, at its site in Delfzijl, the Netherlands.

AkzoNobel has agreed to sell its chemical business to the Carlyle Group, a private equity firm, and its partner, the Singapore-based investment firm GIC, for $12.5 billion. The business, which makes products including chlorine, caustic soda, polymer additives, surfactants, and water treatment chemicals, recorded sales in 2017 of $6.2 billion and pretax profits of $850 million. The parties expect to close the deal by year-end.

The divestment will leave AkzoNobel as a coatings producer with sales of almost $12 billion and pretax profits of $1.1 billion. After paying separation and other costs, AkzoNobel expects to receive net proceeds of about $9.3 billion, most of which it will return to shareholders. Analysts at the equity research firm Jefferies expect AkzoNobel to keep about $1.2 billion to make acquisitions or other investments.

The new owners of the chemical business say they are looking to expand it. “We are committed to growing the business and building upon its innovation capability, high-quality workforce, and asset base, as well as its world-class sustainability and environmental practices,” Martin Sumner and Zeina Bain, Carlyle managing directors, said in a joint statement. Carlyle already owns several chemical companies, including Albany Molecular Research, China Agritech, and H.C. Starck.

The deal will enable the chemical business to capture growth opportunities that would not have been available as part of a paint company, according to AkzoNobel CEO Thierry Vanlancker. For the chemical business, one benefit of becoming independent would be no longer having to compete against the coatings business for limited capital investment, he told C&EN last year.

Vanlancker announced the plan to sell the business or launch it separately on the stock market a year ago following an aggressive, but failed, attempt by U.S. coatings competitor PPG Industries to acquire AkzoNobel for about $22 billion. He gained shareholder approval for the plan on Nov. 30.

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