5 November 2002
Rohm and Haas to buy plastics additives firm for $65.5M
Philadelphia – Specialty chemicals firm Rohm and Haas Co. said Tuesday it will buy the global plastics additives business from Kureha Chemical Industry Co. Ltd. of Japan for $65.5 million.
Raj L. Gupta, Rohm and Haas CEO, said terms call for Rohm and Haas to acquire Kureha's commercial operations throughout the Asia-Pacific region and other areas, along with manufacturing facilities and laboratories in Singapore. Kureha also will continue to manufacture plastics additives products from its plant in Nishiki, Japan, for supply to Rohm and Haas. The companies predicted closing would occur by year-end.
"The sale of our global plastics additives business will enable Kureha to concentrate management and financial resources in less cyclical high value- added product fields," said Hiroshi Amano, Kureha CEO.
Rohm and Haas CFO Brad Bell said the company is paying approximately 6-7 times earnings before interest, taxes, depreciation and amortization (EBITDA) for Kureha's business. The transaction is expected to be accretive within the first year of ownership, he said.
Rohm and Haas's relationship with Kureha goes back nearly two decades when the company began to license Kureha technology for additives. Rohm and Haas sold a 25% interest in its Grangemouth, Scotland, operations to Kureha in the late 1980s, then purchased a 25% interest in Kureha's operations in Singapore shortly thereafter. Tuesday's announcement marks the end of these joint ventures, as Rohm and Haas acquires all of Kureha's plastics additives business, Bell said.
The CFO said the Kureha transaction is expected to be the last acquisition made by Rohm and Haas for the next fourteen months. "There are no plans for any acquisitions next year," said Bell. "Although we believe we have a very strong balance sheet, we want to make it even stronger. Therefore, in 2003, we will aim most of our anticipated free cash flow, perhaps as much as $350 million or more, to debt repayment, with the goal of bringing net debt below $2.4 billion by the end of next year."
Rohm and Haas is a $5.7 billion maker of specialty chemicals and materials, operating more than 100 manufacturing and technical centers around the world. Its plastics additives business reported sales of $398 million in 2001.
Return to Previous Page