Altana says Eckart buy gives it edge in specialty chems

11 August 2005 22:01  [Source: ICIS news]

NEW YORK (CNI)--With its acquisition of Eckart - announced last week - Altana Chemie will have the ability to become No. 1 in its chosen segments of the specialty chemicals business, president and chief executive officer Matthias Wolfgruber said in an interview with CNI Thursday.

 

"We focus only on growing niche markets where we have the ability to become number one," Wolfgruber said. "Being number one makes a huge difference in a knowledge-driven specialty chemicals business."

 

Wolfgruber said that the Eckart  acquisition comes following an intensive search for specialty chemical sector plays that meet Altana Chemie's stringent criteria.

 

The search was narrowed to effect pigments, and Altana expressed interest in both Eckart and Merck KGaA's coatings business. However, the latter business was not for sale, Wolfgruber said.

 

Eckart, which makes metallic effect pigments for applications in paints and printing inks, plastics and cosmetics, recorded sales of Euro302m ($243.5m) in 2004 and EBITDA (earnings before interest, taxes, depreciation and amortization) of Euro65m.

 

Eckart already shares 85% of Altana Chemie's customer base. It will now become Altana Chemie's fourth segment, along with additives and instruments, electrical insulation, and coatings and sealants.

 

"Through leveraging service capabilities and applications know-how, we can get additional growth momentum," Wolfgruber said. "We have additives services labs in Japan, Korea, China, Singapore and India while Eckart has only one sales office in Hong Kong."

 

Following the acquisition, which is expected to close in the fourth quarter, Altana Chemie will boost its sales to around Euro1.2bn, adding eight production sites and 1,850 employees to a total of well over 4,000.

 

Altana Chemie AG agreed last week to buy Furth, Germany-based Eckart GmbH for Euro630m, including the assumption of around Euro70m in debt. After the deal, Bad Homburg-based parent company Altana AG plans to spin off or IPO its Altana Chemie chemical unit in 2006.

 

The purchase price represents a multiple of 9.7x 2004 EBITDA, but Altana notes that the deal comes with a tax shield valued at about Euro70m. Backing out the value of the tax shield yields a more modest multiple of 8.6x EBITDA.

 

Wolfgruber noted that Eckart, with an EBITDA margin of 21%, is one of the most profitable specialty chemicals in the world.

 

Altana has been narrowing its portfolio to highly profitable businesses, having made commodity-type divestitures of units with combined sales of about Euro90m since 2004.

 

The company will continue to seek acquisitions in all its segments and already has a number of deals in the works in the flexible packaging area, Wolfgruber said.

By: Joseph Chang
+1 713 525 2653

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