Clariant Sells Masterbatches

Clariant is focusing on its three core businesses in 2020. The company will sell its Masterbatches business to PolyOne in a deal valued at $1.56 billion. The price represents 12.2 times trailing 12-month EBITDA and is expected to close Q3 2020. 


“This announcement is a significant milestone on our path to focusing on businesses with above-market growth, higher profitability and stronger cash generation. After the successful divestment of Healthcare Packaging in October 2019 the agreement to sell Masterbatches is an important step in delivering on our strategy defined in 2015 to concentrate on our three core Business Areas Care Chemicals, Catalysis and Natural Resources,” said Hariolf Kottmann, executive chairman of Clariant. “As announced, we are confident that we will execute the remaining divestment of our Pigments business in 2020 in order to build the new, more focused and stronger Clariant by 2021.”


As previously announced, the proceeds from the intended divestments of Clariant’s non-core businesses will be used to invest in innovations and technological applications within the core Business Areas, to strengthen Clariant’s balance sheet and to return capital to shareholders. As a consequence of the divestment of the Masterbatches business, as well as the anticipated divestment of the Pigments business by the end of 2020, Clariant’s Board is proposing an extraordinary cash distribution of CHF 3.00 per share to the Clariant Annual General Meeting to be held on March 30, 2020. Subject to a positive vote of Clariant’s shareholders, the extraordinary distribution of approx. CHF 1 billion will be paid out post the closing of the divestment of the Masterbatches business.


“This will be a truly transformational acquisition for both PolyOne and Clariant customers and employees around the world.  Together, we will benefit from the combined ingenuity, passion and expertise of two global leaders in color design, additive technologies and sustainable solutions,” said Robert M. Patterson, chairman, president and chief executive officer, PolyOne. 


“Over the years, we have invested heavily in commercial resources and innovation, emphasizing higher-margin specialty business in less-cyclical end markets.  With this acquisition and the recent divestiture of our Performance Products & Solutions (PP&S) segment, we now expect over 85% of pro forma adjusted EBITDA to be generated from specialty applications,” said Patterson.

 

The deal comprises two separate transactions. The global Masterbatches business is sold in a deal valued at USD 1,500 million, representing c. 12.1 times the last twelve months reported EBITDA (ending September 2019). Separately, the sale of Clariant’s Masterbatches business in India has been approved by Clariant Chemicals (India) Limited’s Board of Directors and is valued at INR 4,260 million or approx. USD 60 million, representing c. 17.3 times the last twelve months reported EBITDA (ending September 2019). Clariant Chemicals (India) Limited is listed on the stock exchanges in India with Clariant AG holding a 51% controlling stake. The closing of both transactions is subject to customary closing conditions and regulatory approvals.
Clariant’s Masterbatches business offers color and additive concentrates and performance solutions for plastics. Clariant’s Masterbatches help to enhance the market appeal or end-use performance of plastic products, packaging or fibers. In the financial year 2018, the total Masterbatches business generated sales of around CHF 1.181 billion.