Archroma, the company forged from SK Capital Partners LP’s purchase of three Clariant AG units, aims to double sales to about $3 billion and lead consolidation in paper- and textile- chemical markets.
“Further consolidation in this market is inevitable,” Chief Executive Officer Alexander Wessels said in an interview in Reinach, Switzerland, adding that he wants to reach the sales target within five years through acquisitions and organic growth.
The emergence of private equity-backed Archroma highlights a shift away from commodity chemicals to higher-margin products for nutrition and personal care by companies from Clariant to BASF SE. BASF, which aborted an attempt to exit leather chemicals, is restructuring under-performing units to get extra savings in areas such as paper.
The chemical industry will see further consolidation in the coming years amid pressure to pay back debts from purchases in the years from 2006 to 2008, A.T. Kearney said. Some 27 chemicalmakers with turnover of more than $1 billion will face a $110 billion wave of debt repayments due between 2013 and 2016, the management consultancy said in a September report.
Wessels will build on the history of Archroma’s businesses, whose roots date back to 1886 with the founding of Sandoz in Basel. With a company of 3,000 employees and sales of about $1.4 billion, there’s an opportunity to add rival businesses across paper, textiles, emulsions and other industries to Archroma’s portfolio, he said.
Archroma, the maker of Cartasol paper dyes and Mowilith emulsions used in paints, will also seek adjacent markets for its existing portfolio, such as technology for water repellency in paints to protect buildings.
“A couple of big plays may transform the market for paper and textiles,” Wessels said. “Our ownership gives us the chance and ability to make quick decisions, and the ambition to further develop and grow the business.”
Dutch national Wessels, an industry veteran who holds an MSc in Molecular Sciences with a career spanning almost 25 years, spent seven years at Royal DSM NV where he most recently headed the Pharmaceutical Products division and was based in the U.S. He’s also held management positions at Unilever, Quest International, and Imperial Chemical Industries.