Total says it has received an offer from Arkema to acquire Total’s wholly owned adhesives subsidiary, Bostik (Paris). Arkema’s offer values Bostik at €1.74 billion ($2.24 billion), representing 11 times the company’s Ebitda. Bostik is the world’s third-largest adhesives company and generated sales of €1.53 billion in 2013. Total has granted Arkema an exclusivity period to pursue the offer. The proposed transaction is subject to approval by the relevant antitrust authorities.
Bostik develops high-performance and high-value-added bonding and sealing solutions for the nonwoven, industrial, construction, and consumer markets. With its solutions that help reduce the weight of materials, improve the energy efficiency of buildings, develop new energies, and replace traditional bonding solutions, Bostik is particularly well placed to take advantage of the momentum of the adhesives market currently enjoying annual growth above global GDP, Arkema says.
Bostik employs about 4,900 people worldwide through its 48 production facilities—18 in Europe, 10 in North America, 8 in Asia, 6 in Australia and New Zealand, 2 in Africa, and 4 in South America.
The acquisition would allow Arkema to further strengthen its position in specialty chemicals and continue developing its high performance materials segment, which would account for 42% of total sales following the Bostik acquisition, Arkema says.
Arkema, which was formerly a part of Total’s chemicals business, is the leading chemicals producer in France. Arkema generates annual revenue of €6.1 billion and employs over 14,000 people.
With the proposed acquisition of Bostik, Arkema would achieve pro forma sales of about €7.6 billion while increasing its headcount to about 19,000 people.
“Since 2006, Arkema has carried through a successful, in-depth transformation of its business portfolio with the aim of becoming a world leader in specialty chemicals. The proposed acquisition of Bostik represents a new major milestone towards this ambition,” says Thierry Le Hénaff, chairman and CEO of Arkema. “The complementarities between the two companies, the quality of Bostik’s management and teams, the common roots within the Total group, and the brands and technologies are all factors that will sustain value creation for our shareholders and ensure successful execution of the project. For Arkema, this new exciting challenge complements the ambitious plan currently in progress to establish acrylics and thiochemicals in Asia through the Jurong Chemical [China] and Kerteh [Malaysia] projects, restore the profitability of fluorogases, carry through its €100-million savings plan announced recently, and realize the strong growth prospects in the attractive oil and gas segment,” Le Hénaff says.
In a steadily growing adhesives market, Bostik’s pace of development together with the synergies identified between the two groups will help improve Bostik’s Ebitda margin, with the long-term objective of an Ebitda margin of 14–15%, in line with peers’ average, Arkema says. This strong potential for improving the results, the solid cash flow generation and the low capital-intensity of Bostik will enable Arkema to continue strengthening its profile and its resilience to the changes of the economic environment, Arkema says.
“Joining France’s leading chemicals company would give Bostik the resources it needs to pursue its industrial and commercial development while fulfilling its commitments to employees and partners,” says Patrick Pouyanné, president/refining and chemicals at Total. “A combination of Bostik and Arkema—which was the result of a successful spin-off from Total in 2006—is a natural next step given their shared history within our group,” Pouyanné says.
This project would also entail increasing the divestment program of noncore activities representing some €500 million additional sales, Arkema says. The deal would be financed by a €350-million rights issue; the issuance of hybrid securities between €600 and €700 million; and a senior bond issuance for the balance, between €500 and €600 million, Arkema says. The share capital increase would be made through preferential subscription rights for existing shareholders.
By Deepti Ramesh