Evonik Industries has signed an agreement with One Equity Partners to acquire US-based Peroxy Chem for $ 625 million. The company is a manufacturer of hydrogen peroxide (H2O2) and peracetic acid (PAA) and is well positioned in high-margin specialty applications.
Essen/Germany — The acquisition is to significantly strengthen the German company's growth segment Resource Efficiency and environmentally friendly and high-growth specialty applications.
The H2O2 and PAA markets are characterized by versatile applications and above-average growth rates — especially for specialty applications with average annual market growth of around 6 %. Peroxy Chem leverages its H2O2 and PAA to focus on sophisticated, less cyclical markets in the environmental, food safety and electronics semiconductor industries. The US-based company already generates approximately three-quarters of its earnings with specialty applications in these segments.
With an adjusted Ebitda margin of about 20 %, profitability of Peroxy Chem is constantly above Evonik’s current group margin, Ute Wolf, Chief Financial Officer of the Germang group said. As a strong-growing and stable financing business, it also generated an attractive free cash flow.
Peroxy Chem expects revenues of approximately $ 300 million and an adjusted Ebitda of around $ 60 million for the 2018 fiscal year. This corresponds to an attractive Ebitda margin of around 20 %. Evonik expects synergies across the combined global business of $ 20 million due to the complementary fit in operations, logistics, expansion of the product portfolio and launch of new technologies. Synergies should be fully realized by 2022.
The purchase price (enterprise value) including synergies is about 7.8 times the annual adjusted Ebitda, or 10.4 times before synergies. The transaction is scheduled to be completed by mid-2019, subject to approval by the appropriate authorities.