• Strengthen the growth capabilities of the resource efficiency business segment
• Upgrading technology-oriented silica business
• Highly complementary product portfolio and regional distribution
• Strategic development of Evonik's product portfolio
Essen-Evonik Industries Group acquired the silica business of US company J.M. Huber (Huber) for $ 630 million. As a result, Evonik will expand the market position of this profitable and stable business in North America and Asia. Dr. Yingkai Shi, Chairman of Evonik Industries Group, said: "Huber's silica business will greatly enhance the growth of the resource efficiency business segment. In addition, this acquisition will provide an opportunity for strategic development of Evonik's product portfolio.
Huber President and CEO Mike Marberry said, "The silica business has been part of Huber since the 1950s, and it has laid the foundation for the global expansion of our company's engineering materials. It is not easy to divide such a long-established business. Things, but we think Evonik is the right strategic choice for our customers and employees in the silica business. "
The silica market is characterized by diverse applications and maintains an annual growth rate of 4% to 6%, which is higher than the market average. Huber's business is focused on applications in the consumer goods industry, such as the dental sector. As of now, Evonik's silica business has focused on industrial applications, such as the tire and coatings industries. Christian Kullmann, Evonik's board member responsible for group strategy, said: "Evonik and Huber's silica business complement each other, and the combination of the two will become an important pillar of our product portfolio. At the same time, Huber's silica business is mainly Focusing on the United States, China, and India, they also complement each other in terms of regional distribution. "
In fiscal 2016, Huber's silica business is expected to achieve nearly $ 300 million in sales and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 60 million. Based on this, EBITDA profit margin is expected to exceed 20%.
Through the complementary advantages of production, logistics, procurement, and product mix, Evonik is expected to have a synergy effect of USD 20 million. Evonik expects to complete all integration work by 2021.
Depreciation related to asset transactions will reduce taxes on future cash payments, with a net present value of approximately $ 80 million. On this basis, the purchase price (enterprise value) including synergy and tax impact is approximately 7 times the annual EBITDA, or 10.5 times excluding synergy and tax impact.
The transaction is planned to be completed in the second half of 2017, subject to the approval of relevant departments. In the first full fiscal year following the completion of the acquisition, Evonik's adjusted earnings per share are expected to increase. The acquisition funds are guaranteed by Evonik's own funds and committed credit lines.
Silica is in the form of fine particles. Based on different surface structures, it will have a significant impact on the performance of the final product. The production of silica requires strong technical support to help achieve close and lasting customer relationships. In addition, no oil-based raw materials are required in the production process, which is also in perfect harmony with Evonik's business strategy of focusing on sustainable development.
Founded in 1883, J.M. Huber is one of the largest family-owned businesses in the United States. The founder Joseph Maria Huber is a German immigrant. The company has an extensive product portfolio covering a wide range of industries including specialty chemicals and forestry products. Currently, Huber has about 4,000 employees in 20 countries and regions around the world. Among them, the silica business has 6 production bases and about 700 employees.
Evonik is a market-leading supplier of silica, offering products and solutions for the tire manufacturing, paint and coating industries. The company's silica products are used as flow aids and carriers in food, cosmetics, pharmaceuticals, and silicone resins.
Evonik is an innovative industrial group from Germany. Our core business, specialty chemicals, is a global leader. Evonik's core strategy is to improve business profitability and maintain continuous growth in corporate value. We combine business with global megatrends: health, nutrition, resource efficiency, globalization. The development of Evonik benefits from its innovative strength and integrated technology platform. Evonik has operations in more than 100 countries. In fiscal 2015, Evonik's more than 33,500 employees generated sales of approximately 13.5 billion euros and operating profit (profit before tax, interest, depreciation and amortization) reached 2.47 billion euros.
Evonik Industries has been producing specialty chemical products in Greater China (including Mainland China, Hong Kong and Taiwan) since the late 1970s, and has had extensive business activities in this region long before. Evonik regards Greater China as one of the driving forces for global economic development, and continuously strives to achieve continuous business growth in Greater China. Evonik Greater China now has approximately 3,000 employees and total sales in 2015 exceeded 1.3 billion euros.