Croda sells US business
NATURAL chemicals group Croda International today agreed to sell its US oleochemicals business in a deal worth £46.7m.
The Goole group has sold Chicago Oleochemicals to American private equity group HIG Capital as part of its plans to focus on core operations following the purchase of Uniqema from ICI for £410m in 2006.
Oleochemicals are based on natural oils and fats, rather than petrochemicals, and are seeing an increasing demand because they are more environmentally friendly.
Chicago Oleochemicals supplies of fatty acids and glycerine which are used in personal care, household and industrial formulated products.
During 2007, the business made an operating profit of £4.6m on turnover of £87.9m and had gross assets of £54.7mn at March 31.
Buyout specialist HIG has more than $4.5bn under management.
Croda said that the proceeds of the deal would be used to reduced net debt. It will continue as a customer of Chicago Oleochemicals.
The transaction is through a sale of assets rather than shares with £38.1m payable in cash at completion and the balance as a loan note due in 2014 but repayable earlier in certain circumstances.
Dresdner Kleinwort acted as financial adviser and Foley and Lardner LLP acted as legal adviser to Croda on the transaction.
Last month Croda reported a robust start to the year as worldwide demand for its products continues to rise.
For the three months ended March 31 turnover increased to £265.3m, up 16.4% from £227.9m in the same period last year.
Pre-tax profits were up 84.8% to £27.9m compared to £15.1m in the first quarter of 2007.
The group said it had successfully managed to pass on price rises of raw materials to its customers – increasing average selling prices by 16.5%.
As part of the group’s strategy to focus on core businesses it sold its 46.5% interest in Baxenden Chemicals for £13m earlier this year.
The sale helped to reduce debt from £366m at the year end to £356.8m by the end of the first quarter.
Croda supplies some of the world’s best known skincare and cosmetics companies such as L’Oreal, Chanel, Clarins, Estee Lauder and Procter & Gamble.
Croda sources extracts for its products from across the world – including an exotic fruit from Fiji and a black tea from Russia which are both renowned for combating wrinkles.
