Ascend shifts to M&A for growth

Author: Will Beacham


US-based Ascend Performance Materials is shifting to an acquisition-based growth strategy as it moves beyond a focus on pure organic growth for the first time. Using mergers and acquisitions (M&A) will allow the company to move into new geographies or complimentary end-uses for the business which is based purely on a fully integrated nylon 6,6 value chain.

President and CEO Phil McDivitt said: “We want to grow organically and potentially now inorganically. At $2bn [2016] sales we’re a relatively small company. So we’re aligned to smaller things allowing us to enhance our geographic footprint or increase the breadth to different end-uses.”

Ascend was formed in 2009 when Solutia sold its nylon business to SK Capital Partners. Its plants – all US-based – include the world’s largest acrylonitrile (ACN) facility (590,000 tonnes/year according to ICIS data) as well as adiponitrile (ADN) adipic acid, cyclohexane and nylon 6,6 plus derivatives.

McDivitt added: “We would consider the acquisition of manufacturing facilities in other regions although we’re very happy being North America–based. We have an active M&A pipeline and are owned by SK Capital, which is in the business of making acquisitions.”

Ascend can produce in the US and compete anywhere else in the world despite the extra logistics costs, according to the CEO. Despite being US-based, Ascend’s business is already geographically diverse with the Asia division rivalling the US as a share of the total. Europe is the smallest of the three.

Ascend’s business is split into two parts – nylon 6,6 and specialty chemicals. These include a wide range of amines, acids, esters and intermediates. McDivitt says he is committed to growing both sides of the business and volumes are evenly split between nylon 6,6 and the chemicals business. However 6,6 generates more revenues because prices are higher for those products.

“I believe we’re one of the only 6,6 producers serving all the different end use markets. So we’re in a unique position to grow as we are strong in industrial fibres as well as end uses like air bags and tyres. We are also a leading producer of cable ties.” The group sells compounds often used for engineering plastics plus fibres for carpets and industrial fibres.


There is structural tightness in ADN and nylon 6,6 and McDivitt expects this to continue. From 2010-2016 demand has grown for nylon 6,6 in the low 3%/year range and this is expected that to continue through 2021.

“Increasing air bag adoption is driving this, especially in Asia where safety systems are currently lacking. Also auto fuel efficiency standards and lightweighting are increasing temperatures under the hood. Cable ties grow at GDP or slightly higher.”

In the years since Ascend was formed, it has grown faster than the market and McDivitt expects this to continue for the next four to five years. The company target is two times GDP growth and that is not inconsistent with how it has grown since 2009, he says.

“Over the last 12-18 months we have become more active in trying to build the value of nylon 6,6 as an important engineering polymer and to build our brand and awareness of Ascend in different segments. We’re well-known by our customers but not by our peers.”

Ascend’s focus on the nylon 6,6 chain is its unique selling point, says McDivitt. “Nylon 6,6 is our business and does not compete with anything else. This chain – starting with ACN – it is the company. For other companies this chain is a smaller part of their business. We wake up and go to bed thinking about nylon 6,6.”

McDivitt gets frustrated when nylon 6 and nylon 6,6 get lumped together. He says the technology around 6,6 is very closely protected whereas there is a lot of nylon 6 production in China. It has good performance characteristics and is used in a broader range of applications than nylon 6. He points out that nylon 6,6 has continued to grow at 3%/year despite the reduction in use for carpets and textiles. He believes substitution has largely played out as has the secular shift away from the use of carpets.


Nylon 6,6 is especially useful in high temperature applications such as turbo-charged internal combustion engines. However, temperatures are lower in electric vehicle (EVs) motors so a major switch in the auto market to EVs could put the nylon 6,6 market under pressure.

McDivitt believes it will be a long time before pure EVs have a meaningful share of the auto market. Ascend forecasts less than 5% by 2030.

“Think about what the switch to EVs entails – it’s a significant undertaking as there will be fundamental changes in the infrastructure required; not just power distribution but manufacturing. EVs will continue to grow but so will efficient internal combustion engine vehicles and hybrids,” he says.

McDivitt says Ascend is active in developing new application opportunities in the EV space, but he does not want to alert competitors to exactly what they are. He points out that the cable tie business should benefit from EVs because they have more requirements for binding wires together.