US Huntsman acquires spray-foam firm Demilec

HOUSTON (ICIS)–Huntsman announced on Tuesday the acquisition of spray polyurethane foam (SPF) manufacturer Demilec from an affiliate of Sun Capital Partners.

Demilec is one of North America’s leading manufacturers and distributors of SPF insulation systems for residential and commercial applications. Demilec has annual revenues of around $170m and owns two manufacturing facilities in Arlington, Texas, and Boisbriand, Quebec, where they produce SPF formulations based on methyl di-p phenylene isocyanate (MDI). Demilec specialises in both closed-cell and open-cell formulations with a focus on eco-friendly and energy efficient products.

Huntsman will pay $350m in an all cash transaction from available liquidity, the company said. The transaction is expected to close by the end of the second quarter.

“Demilec has pioneered MDI SPF insulation and coating technologies for over 30 years, building a strong market reputation with architects, builders and designers,” said Tony Hankins, president of Huntsman’s Polyurethanes division.

“Demilec and the entire SPF industry has delivered strong double digit growth, which we expect to be sustained as their technology provides outstanding insulation performance in a world which is increasingly concerned with improving energy efficiency,” he said. “The Demilec team will continue to be fundamental to the ongoing success of the integrated business after the transaction has closed, as we rapidly build our North American platform and aggressively expand the business into international markets.”

CEO Peter Huntsman said, “This bolt-on acquisition is a great fit to our core strategy to move downstream.  The integration of Demilec into our Polyurethanes business offers significant synergies and delivers substantially higher and very stable margins by pulling through large amounts of upstream polymeric MDI into specialised spray foam systems.”

This integrated business will have double-digit growth and margins greater than 25% in terms of earnings before interest, tax, depreciation and amortisation (EBITDA), he said.

Image below shows PU spray foam being applied. Photo by Al Greenwood