Arkema announces the proposed divestment of its PMMA business to Trinseo
This project is a new step in the Arkemas’s transformation, and is in line with the company´s ambition to become a pure Specialty Materials player by 2024
The corresponds to 9.3 times estimated 2020 EBITDA
The project offers great development opportunities for the PMMA business over the long term
Highly synergistic acquisition of Arkema’s PMMA business is the first step and a key catalyst in Trinseo’s portfolio transformation
December 14, 2020 - Trinseo, a global materials company and manufacturer of plastics, latex binders and synthetic rubber, announced today its entry into a binding agreement with Arkema S.A., a leader in specialty chemicals, to acquire Arkema’s polymethyl methacrylates (PMMA) and activated methyl methacrylates (MMA) businesses. PMMA is a transparent and rigid plastic with a wide range of end uses, and is an attractive adjacent chemistry which complements Trinseo’s existing offerings across several end markets including automotive, building & construction, medical and consumer electronics.
“This acquisition will be a catalyst for portfolio transformation toward becoming a higher margin, less cyclical solutions provider,” said Frank Bozich, Trinseo President and Chief Executive Officer. “Arkema’s PMMA business has consistently delivered attractive margins with products serving many of Trinseo’s end markets. We believe this is an excellent first step in our portfolio transformation that is expected to ultimately include the separation of some of our commodity businesses. We look forward to the Arkema PMMA team joining Trinseo and we believe the complementary nature of the transaction should drive growth opportunities for the PMMA business globally.”
The transaction is expected to generate approximately $50 million in annual pretax cost synergies by 2023 and additional revenue synergies by leveraging Trinseo’s market overlap and existing Asia organization to accelerate growth. In addition, it is expected that, as a result of harmonizing global ERP systems, Trinseo will realize an additional $25 million in IT-related productivity savings in its existing businesses. These IT-related savings represent meaningful benefits above the PMMA-related synergies.
Arkema’s PMMA activity is an integrated business, from production of methyl methacrylate to polymethyl methacrylate, marketed under the well-known brands Plexiglas on the American continent and Altuglas in the rest of the world. This activity benefits from leading commercial positions with products primarily dedicated to the automotive, construction, signs & displays, and sanitary ware markets.
Arkema’s PMMA business employs some 860 people and operates 7 production sites (4 in Europe and 3 in North America). Sales in 2020 are estimated at around €510 million for an EBITDA around €122 million, despite the context of Covid-19. In 2019, EBITDA was close to its historic high, at €160 million.
Arkema’s PMMA business is a leader in several end market applications including automotive and building & construction, enhancing Trinseo’s existing strong positions in these applications. In addition, the combination of Trinseo’s existing portfolio with the PMMA business will enable greater focus on future growth markets such as Asia, which represents approximately 70% of the global PMMA market.
Trinseo generated sales of US$3.8 billion in 2019, and operates 17 production sites worldwide, with a workforce of 2,700 people. Arkema’s PMMA activity will complement Trinseo’s range of performance plastics (ABS, PC, etc.), and strengthen its positions in the automotive, construction and lighting markets. Hence, these highly complementary activity portfolios will offer new growth and development opportunities.
The offer received is based on an enterprise value of €1,137 million, and the capital gains tax is expected at around 15% of this amount.
With this proposed divestment by Arkema, which comes after the sale of the company[s functional polyolefins business to Korean group SK last June, the share of Specialty Materials sales within Arkema increases from 79% to 87% based on the 2019 proforma figures. The Group thus takes another major step in its transformation, with the ambition of becoming a pure Specialty Materials player by 2024, centered only around Adhesive Solutions, Advanced Materials, and Coating Solutions.
Thierry Le Hénaff, Chairman and CEO of Arkema, said: "This proposed divestment is fully in line with the Group's strategy presented at our Capital Markets Day last April. It will allow Arkema to continue to significantly reduce the share of its Intermediates segment and to consolidate its foothold in specialty materials with high technological content. Trinseo is a high-quality company which will be able to welcome in the best possible way PMMA’s management and highly professional teams, support its customers and partners over the long term, and capture the many growth opportunities for this sustainable and high performance material."
The proposed disposal is subject to the approval of the relevant antitrust authorities and to an information and consultation process involving Arkema’s employee representative bodies. The deal is expected to be finalized mid-2021.
Source: Trimseo / Arkema