Croda to Buy Seed Additive-Maker Incotec for $164 Millionby
Incotec is Croda's biggest purchase since hiring of M&A chief
Croda purchase of Incotec will increase competition for BASF
Croda International Plc, the world’s second-largest maker of cosmetic ingredients, agreed to acquire Incotec Group BV for 155 million euros ($164 million) to expand into the market for additives to improve the performance of crop seeds.
Incotec had revenue in the year through Sept. 30 of 71 million euros, Snaith, England-based Croda said in a statement.
Croda has honed its focus on high-margin market areas where patents and research and development create higher barriers of entry for would-be competitors. The U.K. company hired Anthony Fitzpatrick, a former investment banker with UBS AG and Jefferies Group LLC, in March 2014 to scout for deals. The purchase of Incotec follows a move by larger rival, BASF SE, to also expand in seed additives, buying Becker Underwood for $1 billion in 2012.
"Incotec is a rare asset in a niche, high-value, fast-growing sector of the global crop market,” Chief Executive Officer Steve Foots said in the release.
Shares of Croda added 1.3 percent to 2,904 pence as of 12:15 p.m. in London. The stock has advanced 9 percent this year, valuing the business at 3.95 billion pounds ($6 billion).
Incotec will add scale to Croda’s existing seed treatment business, including polymers used to encapsulate and reshape seeds so they don’t stick together and coatings that enable other additives to be released over time. With commodity products facing pressure from companies based in emerging markets, Western chemical companies have sought out niche market areas to bolster growth.
Rabobank Groep advised Incotec on its sale. Greenhill & Co. worked with Croda on the purchase.