Chemical company completes transition with £778m sale
Chemicals business Croda International has signed a definitive agreement to sell the majority of its Performance Technologies and Industrial Chemicals (PTIC) business to Cargill Velocity Holdings for £778m.
The deal follows a comprehensive strategic review of PTIC in may this year which looked at the best ownership structure to ensure the future success of the business and complete’s the East Yorkshire company’s move to be a focused consumer and life sciences company.
The divested business, which represents 77% of PTIC’s 2020 revenue includes five manufacturing facilities, including the Gouda plant in the Netherlands, the Hull plant in the UK and Croda Sipo in China, with the latter being a joint venture with Croda and the deal including Croda’s 65% stake in the site.
The East Yorkshire-based business noted that if the sale of 100% of Sipo could not be completed the site would be excluded from the deal and reduce the value by c.£119m
The retained parts of the PTIC division will provide integral support to the Croda’s consumer care and life sciences sectors, becoming the industrial specialties (IS) sector and play a key role in Croda’s integrated model and generating additional revenues from a new supply agreement, whereby Croda will supply certain ingredients to Cargill Velocity.
The business noted it intends to reinvest proceeds from the transaction into faster growth areas, increasing its exposure to health care and further developing its position as a sustainability leader in consumer care and crop care markets.Steve Foots, chief executive of Croda, said: “Today’s announcement completes our transition into a pure-play consumer and life sciences company. We will focus our capital and resources on delivering sustainable solutions and scaling our consumer, health and crop care technologies, leading to consistent sales growth and an even stronger profit margin.
“Cargill is a company with a distinguished history and strong values. Under its ownership, the divested business and our talented, hardworking employees can look forward to a bright future.”
Colleen May, president of Cargill’s Bioindustrial business said: “The bioindustrial space is a priority for Cargill, as we strive to support our customers with innovative, nature-based solutions that deliver real-world benefits. Combining our diverse, global supply chain and deep operational expertise with Croda’s extensive industrial business capabilities and broad bio-based portfolio will spark a new wave of innovation and create tremendous value for our customers.”
Croda and Cargill are currently working together on the process to separate the two businesses, with completion of the transaction expected in summer 2022. The transaction is subject to receiving customary regulatory approvals but is not subject to approval by Croda’s or Cargill’s shareholders.