Arkema Buys Sealant Maker Den Braven in $534 Million Dealby
CEO builds on past acquisition of Bostik at similar multiple
Den Braven being sold by Dutch private equity firm Egeria
Arkema SA agreed to buy Dutch sealant-and-adhesives maker Den Braven in a deal valued at 485 million euros ($534 million) as Chief Executive Officer Thierry Le Henaff builds on the acquisition of Bostik, the French company’s first foray into these specialty glues.
Den Braven will add sales of about 350 million euros and integration with Bostik could generate cost savings of 30 million euros in five years, Arkema said in a statement Wednesday. The price tag implies a multiple of 11 times this year’s earnings, before interest, taxes, depreciation and amortization.
Investors initially balked at the $2.2 billion price Arkema paid in 2014 for Bostik, yet they were eventually won over by Le Henaff’s integration of the former Total SA division, which he used to run for the French oil company. Once a family owned business, Den Braven honed its focus on as many as six types of sealant formulations under the ownership of Dutch private equity firm Egeria.
Shares of Arkema rose 2.4 percent to 74.34 euros as of 2:40 p.m. in Paris.
Higher-margin Den Braven is being acquired for a similar multiple as Bostik and the targeted savings “should be achievable given the strategic fit,” Thomas Wrigglesworth, an analyst at Citigroup, said in a note.
“When we did the Bostik acquisition, we were entering a new business and were confident of taking it to a higher level,” Le Henaff said in a phone interview. “Any new acquisition would be a bolt on, with rather significant synergies.”
The Den Braven brand will be retained, as will an “attractive” private label side to the business, he said. Den Braven brings state-of-the-art technology and manufacturing processes that can be adopted by Bostik, though it’s too early to say if there’s potential to consolidate plants, he added.
Egeria, the seller of Den Braven, was advised by Evercore. Arkema handled the acquisition internally, with no financial adviser.