The maker of sunblock chemicals and pharmaceutical additives plans to raise 600 million pounds ($796 million) in equity to help pay for the purchase of the asset from private equity firm Eurazeo, it said in a statement on Wednesday. Bloomberg earlier reported Croda was lining up funding for a deal and that Iberchem was a target.
In buying Murcia, Spain-based Iberchem, Croda is turning the tables on fragrance makers that have been expanding on its turf. Switzerland’s Givaudan SA is among the scent suppliers that are prioritizing expansion in the personal-care market as they look to offer global consumer-goods companies the full spectrum of ingredients.
Croda Chief Executive Officer Steve Foots is now showing the same ambition to build a complete offering for clients such as Unilever Plc. Iberchem generates 80% of its sales from fragrances used in personal- and home-care products such as household detergents. Food, drug and oral-care account for the remainder of the 174 million euros in revenue last year, with 34 million euros in Ebitda generated.
Shares of Croda have risen 19% this year, giving the company a market value of about 7.8 billion pounds. It got a boost last week after the company announced a five-year contract with Pfizer Inc. to supply novel excipients used to manufacture a Covid-19 vaccine candidate.
Lazard advised Croda, with Freshfields Bruckhaus Deringer providing legal help. Morgan Stanley and HSBC are coordinating the planned share sale, as well as being joint advisers.
Croda said it’s leverage will increase to two times its earnings before interest, taxes, depreciation and amortization post the deal.
Croda’s largest acquisition to date was its 2006 purchase of Imperial Chemical Industries Plc’s Uniqema unit for 410 million pounds, according to data compiled by Bloomberg. That deal provided Croda with a launchpad to more than a decade of growth in higher-margin specialty chemicals.
The company hired experienced chemicals dealmaker Anthony Fitzpatrick in 2014 to lead corporate development. Croda went on to make a multitude of bolt-on acquisitions focused on technology to make complex ingredients used in health-care products and top-end moisturizers. Attempts at another transformational deal proved unsuccessful in 2018 when its pursuit of Ashland Global Holdings Inc. ended in a disagreement over valuation.
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