Altana pays $780MM for Eckhart

15 August 2005 00:01  [Source: ICB Americas]

IN A move that will significantly expand its presence in specialty chemicals, Altana Chemie AG has agreed to buy Furth, Germany-based Eckart GmbH for €630 million ($780 million), including the assumption of around €70 million in debt. After the deal, parent company Altana AG plans to spin off or IPO its chemical unit in 2006.

Eckart, which makes metallic-effect pigments for applications in paints and printing inks, plastics and cosmetics, recorded sales of €302 million in 2004 and EBITDA (earnings before interest, taxes, depreciation and amortization) of €65 million.

The acquisition comes after an intensive search for specialty chemical sectors that meet Altana-Chemie’s stringent criteria.

“We focus only on growing, niche markets where we have the ability to become number one,” says president and CEO Matthias Wolfgruber. “Being number one makes a huge difference in a knowledge-driven specialty chemicals business.”

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.

After the acquisition, which is expected to close in the fourth quarter, Altana Chemie will boost its sales to around €1.2 billion, adding eight production sites and 1,850 employees to a total of well over 4,000.

Eckart, which already shares 85 percent of Altana-Chemie’s customer base, will become the fourth segment of the company along with additives and instruments, electrical insulation, and coatings and sealants.

The purchase price represents a multiple of 9.7x 2004 EBITDA on the surface, but Altana notes that the deal comes with a tax shield valued at €70 million. Backing out the value of the shield yields a more modest multiple of 8.6x EBITDA.

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.

With the acquisition, the largest in Altana Chemie’s history, the company will be separated from parent Altana AG as an independent, publicly traded company.

 

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