US WR Grace boosting PE catalysts with acquisition, eyes more deals – execs

15 December 2017 17:55 Source:ICIS News

HOUSTON (ICIS)--WR Grace’s planned acquisition of Albemarle’s polyolefins catalysts business will help Grace strengthen its single-site polyethylene (PE) catalyst portfolio, the company’s top executives said in a webcast analysts' call on Friday.

The $416m deal, announced on Thursday, 14 December, is expected to close in the first quarter of 2018.

The acquired business has a “leading positon" in single-site PE catalysts and includes significant research and development (R&D) capabilities, along with manufacturing operations in Baton Rouge, Louisiana and Yeosu, South Korea, CEO Fred Festa and chief operating officer Hudson La Force said.

Single-site catalysts are the fasted-growing PE catalyst segment, driven by market demand for sophisticated resins, they said.

A single-site catalyst generates a stronger, tougher resin for the manufacturing of high-value plastics, including film, bottles, pipes, as well as medical, electronic and other applications.

“[The catalysts] allow engineers to design products that are lighter, clearer and cleaner to manufacture”, La Force said

The acquisition of the business, with its 175 employees, marked a “step-change” for Grace’s existing single-site PE catalyst business, he said.

Grace plans to finance the acquisition through a combination of debt and cash, La Force said, adding that the company’s strong cash flow allowed it to pursue additional similar-sized deals.

Last year, Grace already acquired BASF’s polyolefin catalyst assets, and in 2013 it acquired Dow Chemical's polypropylene (PP) licensing and catalyst business.

Kevin McCarthy, chemical analyst at Vertical Research, said that the latest acquisition was “a great fit for Grace”.

“The acquisition at hand should serve to increase the scale and broaden the scope of Grace’s polyolefin catalysis platform,” he said.

At the same time, seller Albemarle was benefiting as it could use the cash proceeds from the deal to support its increased focus on lithium, “a business that will require substantial investment to support rapid growth in the years to come”, the analyst said.

Additional reporting by Al Greenwood

Photo: Bags are made from a variety of plastic films, including polyethylene. (Most Wanted/REX/Shutterstock)

By Stefan Baumgarten