Croda makes Chinese acquisition

CRODA International has announced a £38m deal to acquire a majority stake in a Chinese chemicals manufacturer.

The Goole-based speciality chemicals business said the deal to buy a 65% stake in Sichuan Sipo Chemical Co would increase its presence in emerging markets and strengthen its performance technologies operation.
 
Croda said the deal has received Chinese regulatory approval for the non-listed natural speciality chemicals manufacturer based in Mianyang City, Sichuan Province.

The majority stake will be acquired from Sichuan Forever Holding Co and certain individual shareholders for a total consideration of £38.2m, including £8m of debt, subject to working capital, net cash and fixed asset adjustments.

Sichuan Forever Holding Co will continue as the minority shareholder retaining a 35% equity interest in Sipo.
 
Sipo was established in 1993, has around 300 employees and makes speciality derivatives from natural raw materials and products include primary amides, novel fatty acids and speciality esters.

In 2012 the business reported a turnover of £28m and EBITDA (earnings before interest, tax, depreciation and amortisation) of £3.1m.

Croda said that Sipo has a “state of the art, well invested production facility, custom built in 2011” which will allow additional capacity and increase Croda’s proximity to customers in the region, strengthening its existing operations across China and the group’s overall position in Asia.

Sipo will also consolidate Croda’s leading global position in fatty acid amides and add new technology that will enable the group to expand its portfolio across a number of its core markets.
 
Apart from a small number of by-products, all of Sipo’s products will be sold through the Croda global sales network. Croda’s initial focus is to grow sales from its performance technologies business to the polymer additives and lubricants sectors, with further opportunities in new markets expected to follow in due course.
 
Steve Foots, chief executive of Croda, commented: “This is a significant step forward in our strategy to increase Croda’s presence in fast growing and emerging markets. Sipo’s manufacturing capabilities together with our marketing expertise and sales force infrastructure are an exciting combination.

“We will have a stronger platform in niche markets and renewable technologies which will allow us to develop our customer base and drive sales growth in Asia. Our broader footprint in China will also enable us to be more responsive to customer needs in this important region.”

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