NEW YORK (ICIS)--Ascend Performance Materials’ acquisition of France-based Eurostar Engineering Plastics will enhance its electrical and electronic (E&E) capabilities with a wide range of nylon 6,6, nylon 6, polybutylene terephthalate (PBT) and other products, its CEO said on Tuesday.
Ascend announced on 5 January the acquisition of the compounder of flame-retardant engineered plastics with expertise in halogen-free formulations.
“From a strategy standpoint, we wanted to strengthen our E&E capability as we focus more on electronics and e-mobility,” said Phil McDivitt, CEO of Ascend Performance Materials, in an interview with ICIS.
“Eurostar has an exceptionally strong electronics and flame-retardant portfolio but lacked the scale to grow on a global basis. With our global footprint, this gives us the capability to service global customers in high-growth markets,” he added.
Eurostar’s products are used in e-mobility, smart appliances, industrial automation and consumer electronics.
A typical electric vehicle (EV) uses around 35-40% more nylon 6,6 than a traditional internal combustion engine (ICE) vehicle, McDivitt pointed out.
“The UL yellow card [certified flame retardants from Eurostar] accelerates our ability to put those into E&E applications and the e-mobility space,” said McDivitt.
Certain Eurostar products are used in EV charging stations, and flame retardant grades in EV batteries itself, he noted.
The latest transaction by Ascend comes after its 2020 buyouts of Italy-based compounding and colour firms Poliblend and Esseti Plast, as well as a compounding facility in Suzhou, China. Poliblend and Esseti Plast brought more consumer and industrial markets to Ascend’s portfolio.
“As we grow our EP [engineered plastics] business, we want it to become stronger across a number of platforms. Eurostar fits perfectly in an increasingly electronics-enabled world,” said McDivitt.
Another benefit from the Eurostar acquisition will be vertical integration, as Ascend supplies nylon 6,6 resin and can also move China production of finished materials to its own facilities.
Eurostar currently has a compounding partner in Jiangsu, China that produces its StarFlam and Staramide engineered plastics for the local market.
“I’d envision bringing production in-house to our facility in Suzhou - that’s the idea,” said McDivitt.
The CEO sees a healthy global automotive market in 2021 with a “significant increase in auto builds from 2020 to 2021”. However, auto builds are still not likely to get back to 2019 levels until 2022, he noted.
“Business is extremely busy and we are running everything full out. Automakers are operating at a high rate and through the chain there was a significant depletion of inventory,” said McDivitt.
“Nylon 6,6 is tight right now and we see that through the first half. About half the world’s demand comes from auto and the other half from electronics, consumer and industrial. We see good strong growth across all these segments over the next few months. We see demand levels higher than pre-Covid, with part of this tied to inventory rebuild,” he added.
Ascend, as a portfolio company of private equity firm SK Capital, will continue to seek acquisitions that fit with its strategy of adding differentiated products and enhancing its geographic footprint at attractive economics, the CEO said.
Interview article by Joseph Chang