Clariant, a focused and innovative specialty chemical company, has agreed to sell its whole Masterbatches business to PolyOne. The transaction values the Masterbatches business at the US $ 1,560 million (approximately Rs 11,000 crore), representing c. 12.2 times the last twelve months reported EBITDA (ending September 2019) on a cash and debt-free basis. According to the company, this amount is payable at closing, which is expected by Q3 2020.
Hariolf Kottmann, executive chairman of Clariant, said, “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. As announced, we are confident that we will execute the remaining divestment of our Pigments business in 2020 to build the new, more focused, and stronger Clariant by 2021.”
As previously communicated by the company, 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 of directors is proposing an extraordinary cash distribution of CHF 3.00 (approximately Rs 222) for a 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 approximately CHF 1 billion (approximately Rs 7500 crore) will be paid outpost the closing of the divestment of the Masterbatches business.
The deal with PolyOne comprises two separate transactions. The global Masterbatches business is sold in a deal valued at the US $ 1,500 million (approximately Rs 11,000 crore), 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) board of directors and is valued at Rs 426 crore (approximately US $ 60 million), representing c. 17.3 times the last twelve months reported EBITDA (ending September 2019). Clariant Chemicals (India) 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 (approximately Rs 875 crore).