DSM buys advanced resins business
Avecia, for €515 million, underlining increasing industry and
consumer demand for environmentally-friendly coating technologies.
Indeed, DSM argues that the acquisition fits perfectly with its strategy of strengthening its coating resins business, and bringing is businesses into line with current trends.
"I am delighted that DSM and Avecia have reached agreement," said Peter Elverding, DSM's managing board chairman.
"It is exactly the kind of acquisition DSM was looking for to finalise the portfolio transformation envisaged in our Vision 2005 strategy. It is an excellent fit since it will strengthen DSM's Performance Materials portfolio and increase our presence in high-growth specialities."
In all coating markets, ecological considerations and ever-stricter environmental legislation are playing an increasingly important role in product development. DSM claims that the advanced technology that NeoResins will bring will enable the company to be at the cutting edge of environmentally aware resin production.
The company is certainly confident that the deal will bring the company increased business. NeoResins' sales in 2004 are expected to be around €270 million with an EBITDA of approximately €52 million. DSM points out that the division has enjoyed high growth - around six per cent - and high profit margins in attractive markets.
NeoResins will form part of the business group DSM Coating Resins and will trade as DSM NeoResins. It is expected that this business group will develop synergies over the coming period in the fields of technology, markets, innovation and purchasing.
Elverding claims that the acquisition price is perfectly in line with the previously indicated range. He argues that with an EBITDA / sales margin of 20, NeoResins will contribute immediately to DSM's earnings per share and profitability.
"Against this background, the multiple we will be paying for NeoResins is full but fair," he said. "The combination of DSM Coating Resins and NeoResins will be an innovative and leading producer in the market of environmentally friendly coatings and resins."
Netherlands-based NeoResins is a global technology leader in water-based acrylic and polyurethane resins for use in coatings, adhesives and inks. The majority of NeoResins' sales are generated in Europe and the USA.
This transaction is subject to various external approvals and will be submitted to the works councils according to the usual procedures. However, it is anticipated that the closing will take place in the first quarter of 2005.
