Listed chemicals firm announces £736m acquisition

Yorkshire-based speciality chemical business Croda International has agreed to acquire Spanish Topco, SL, trading as Iberchem, a global fragrances and flavours company, for €820m (c.£736m).

Iberchem has been majority owned by Eurazeo since 2017. It was founded in 1985 and is headquartered in Murcia, Spain.

As of August 2020, it had about 850 employees, 14 manufacturing facilities, 10 R&D centres and a commercial presence in 120 countries.

Approximately 80% of its sales are fragrances for Personal Care and Home Care products, areas where it has a similar customer profile to Croda.

Steve Foots

Steve Foots, Croda’s chief executive officer, said: “Our expansion into the fast-growing fragrances and flavours market further increases our exposure to Consumer Care markets and adds another exciting growth adjacency to Croda’s market-leading position.

“We have known Iberchem’s team for many years and their business is highly compatible with Croda’s.

“Iberchem stands out with its significant exposure to emerging markets, extensive product portfolio well placed to adapt to sustainability trends, strong customer focus and R&D capability, and 10 year track record of consistent year-on-year growth.

“By bringing our businesses together, we are creating a new, full service offering to our customers in Consumer Care markets and a compelling platform from which to grow the combined business in the years ahead.

“We look forward to welcoming our new colleagues to Croda and leveraging our respective networks and expertise.”

Croda, which is headquartered near Snaith in East Yorkshire, adds that the acquisition is expected to close by the end of 2020.

It notes that Iberchem has an “excellent financial track record,” having grown consistently year-on-year since 2010.

In 2019, Iberchem generated €174m (c.£153m) revenue and €34m (c.£30m) EBITDA. It has continued to trade well, despite recent challenging market conditions due to COVID-19, with 2020 revenue forecast to be €187m (c.£166m) and EBITDA of €40m (£c.36m).

Croda’s acquisition report adds: “Iberchem has an extensive portfolio of products across Personal Care (fragrances for facial care and hair care), Home Care (fragrances for surface cleaner and fabric care) and in Flavours.

“Croda’s formulation capability will complement Iberchem’s expertise, developing new ways of meeting customer needs.

“Iberchem will be able to leverage Croda’s global network, notably in North America, and existing customer base of c.5,900 Personal Care and Home Care customers.

“Croda will gain access to c.3,000 Iberchem customers, particularly in certain countries in regions where the Group has historically been under-represented, such as in the Middle East, North Africa and parts of Asia and Latin America.”

The deal will be funded via a combination of Croda’s existing debt facilities and the proceeds of an equity placing, representing c.8% of Croda’s issued share capital.

The placing of new ordinary shares in the capital of Croda to institutional investors is expected to raise net proceeds of c.£600m. 

The placing is being conducted through an accelerated bookbuild which will be launched immediately.

In addition to the placing, there will be an offer made by Croda on the PrimaryBid platform of new ordinary shares in the capital of the company at the placing price, to provide retail investors with an opportunity to participate.

Mark Allcroft, Jason Kenneally and James Moore from EY in Leeds advised Croda on the transaction.