US Avient glad it did not cancel Clariant deal amid pandemic – CEO
HOUSTON (ICIS)–The masterbatch business US polymer materials company Avient acquired from Swiss Clariant is performing well and Avient is glad it did not listen to sceptics who urged it to cancel the deal amid the coronavirus (Covid-19) pandemic, CEO Robert Patterson said in an update on Wednesday.
There was speculation earlier this year that the pandemic had impaired the masterbatch business, making the acquisition unviable, and sceptics advised Avient to invoke a major adverse event clause to back out of the $1.6bn deal it agreed in December 2019.
However, Avient went ahead and closed the acquisition on 1 July, adding more than 3,500 employees, and renaming from PolyOne to Avient.
Patterson said that contrary to the speculation, there was no impairment – “this simply wasn’t and isn’t true” – and Avient’s Q3 results, issued earlier on Wednesday, were proof of that.
Furthermore, the integration of the masterbatch business “is going extremely well”, with synergies now targeted at $75m, up from an earlier expectation of $60m, he said.
With the acquisition, and the earlier divestment of its performance products and solutions business last year, Avient’s portfolio is now far more resilient and specialised, he said.
About 87% of Avient’s adjusted segment earnings before interest, tax, depreciation and amortisation (EBITDA) is now generated from specialty applications, Patterson said.
In addition, nearly 60% of the company’s sales are coming from applications going into the growing packaging, consumer and healthcare end markets, he said.
Avient’s September sales rose 6% year on year, and orders for October and November show that the economy is improving and will do so through the balance of 2020, Patterson said.
On a pro-forma basis – that is, assuming that Avient had owned the masterbatch business in Q4 2019 – Avient currently expects to report Q4 2020 EBITDA of $103m, up 11% year on year.
This translates to a 17% year on year increase in adjusted Q4 earnings per share (EPS) – which “is a big deal”, considering that many companies expect EPS flat or down in Q4, Patterson said.
“This says a lot about the quality of our portfolio, but also about the strength of our combination with Clariant,” he said.
However, Patterson also warned about uncertainties from impacts of the new coronavirus lockdowns.
Given the uncertainties, Avient is currently not providing a 2021 outlook.
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