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Ineos to buy Ashland’s composites business, Germany BDO unit for $1.1 billion

November 16, 2018
Chemical Value Chain

Ineos has agreed to acquire Ashland’s worldwide composites business and Ashland’s production site at Marl, Germany, including a butanediol (BDO) plant, for about $1.1 billion. The deal is expected to be completed in the first half of 2019, subject to regulatory approvals, standard closing conditions, and employee consultation.

Ineos is buying assets from Ashland with combined sales of more than $1.1 billion/year and 20 sites across all major regions. Ashland says that its composites business is a world leader in unsaturated polyester resins, vinyl ester resins, and gelcoats. The business also provides corrosion-resistant, fiberglass-reinforced plastic. It has seven production plants in the United States and manufacturing facilities in Brazil, China, Finland, France, Poland, and Spain. The Marl BDO plant forms part of Ashland’s intermediates and solvents segment. Other plants at the Marl site make products including acetylene, tetrahydrofuran, and formaldehyde.

Analysts at Jefferies estimate that the acquisition’s value represents a multiple of more than 6x EBITDA. “Net proceeds were lighter than we expected,” Jefferies says.

“Ashland’s composite resins have been the materials of choice for the world’s boat builders for 30 years, and for a good reason,” says Ashley Reed, CEO of the Ineos Enterprises business. “They are light, strong, and resistant to attack from chemicals and even fire. Unlike wood, they don’t rot, unlike metal they don’t corrode, and unlike concrete they don’t crack.”

Ashland will retain a BDO plant at Lima, Ohio, to ensure consistent supply for the company’s internal needs.

Ashland announced in March that it would explore options for its composites business and the Marl BDO unit, citing a policy to focus on specialty ingredients with improved margins. The assets being sold to Ineos have “strong market positions,” says Ashland chairman and CEO Bill Wulfsohn. “The divestiture of these businesses is consistent with Ashland’s vision of becoming the premier specialty chemicals company. With a more streamlined and focused product portfolio, improved margins, and reduced earnings volatility, Ashland will be better positioned to deliver sustained earnings growth.”

Ashland says it plans to use proceeds from the sale primarily to reduce debt.

By Ian Young

Source: Chemical Week

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