Arkema SA, the chemical maker spun off from Total SA, plans to buy resin units from its former parent for 550 million euros ($736 million) to challenge BASF SE and Dow Chemical Co. in the market for materials used in paint.
Cray Valley, Cook Composite Polymers, and Sartomer will generate an estimated 850 million euros in sales this year, Arkema, based in Colombes near Paris, said in a statement today. Revenue may grow to 900 million euros by 2015, with the purchase adding to earnings in the first 12 months of ownership, it said.
“We should become a global leader in the coatings market alongside BASF and Dow Chemical,” Chief Executive Officer Thierry Le Henaff told journalists on a conference call today. “It’s adding to our geographical footprint and product lines in paints and adhesives.”
Le Henaff has pledged to boost Arkema’s sales by 29 percent to 7.5 billion euros by 2015, and his latest purchase targets the market for materials used in graphic arts, optics and electronics. Spun off from Total in 2006, Arkema has highlighted cost-savings within marketing and research, yet no job cuts are planned following the acquisition, he said.
The planned purchase, expected to be completed in the first half, will boost Arkema’s net debt-to equity ratio to about 40 percent, up from less than 15 percent. Arkema’s net debt-to-Ebitda ratio will rise “slightly above one” after the acquisition, Le Henaff said. Arkema said last month that acquisitions would boost sales by at least 1 billion euros by 2015.
The units, which employ 1,750 people in 13 countries in Europe, the U.S. and Asia, will aim for an Ebitda margin of 14 percent in 2015 “in a normalized environment,” Arkema said.
Arkema rose 1.4 percent to 54.23 euros at 11:47 a.m. in Paris trading. The stock has more than doubled this year.
The company is rated one notch above non-investment grade at Moody’s Investors Service and Standard & Poor’s. The latter said today Arkema’s BBB- rating remains unchanged after the announced acquisition.