Chemical Business Research Articles

A new formula for innovation

For years, AkzoNobel has been struggling to innovate in seven key areas: plastics recycling, wastewater-free chemical production, cellulose-based alternatives to synthetics, biobased surfactants, biobased sources of ethylene, and highly reactive chemistries. R&D managers at the Dutch company now think they may have hit upon an approach that is innovation gold. While AkzoNobel’s chemists haven’t given up on homegrown solutions, they are changing their tack and emphasizing innovation from outside the company more. AkzoNobel already has dozens of university collaborations for fundamental research. The latest effort is about getting to market more rapidly by working with start-ups that have suitable technologies already in development. A competition recently debuted by AkzoNobel’s chemical business offers start-ups the prize of a commercial partnership if they can come up with solutions to targeted problems. The competition delivered a plethora of suitable start-ups to the company’s front door. And AkzoNobel ...

PPG drops AkzoNobel bid

PPG Industries has withdrawn its $28.8 billion bid to purchase Dutch paint rival AkzoNobel. The bid represented a premium of 50% over AkzoNobel’s stock price in March, before the overture was announced. Many AkzoNobel shareholders, including activist investor Elliott Advisors, wanted AkzoNobel to negotiate, but the company refused. It instead rolled out a plan to spin off its chemicals business within the next year. Last week, PPG’s campaign suffered two fatal setbacks. The Dutch financial market authority wouldn’t extend PPG’s deadline to make a tender offer for AkzoNobel past June 1. Separately, a Dutch appeals court ruled against Elliott in its bid to unseat AkzoNobel chairperson Antony Burgmans. Elliott wanted the court to let shareholders vote on whether to remove Burgmans after AkzoNobel’s board blocked the vote.

AkzoNobel chemicals CEO eyes solo future

AkzoNobel’s chemicals business, with annual sales of $5 billion, has entered a period of strong financial performance that will continue until well after it is carved out of AkzoNobel in about 12 months, according to its CEO, Thierry Vanlancker. The Belgian national, who has held senior roles with DuPont and Chemours, rejects comments by some analysts that the business’s commodity chemicals units need to be more profitable and that restructuring will be required. “The business units have been steadily improving,” he says. Furthermore, the chemicals business’s combination of commodities and specialties means that overall demand for its products will be steady through economic cycles, he argues. “The outside perception is that the surface chemistry and polymer chemistry businesses are the most technologically advanced and that industrial chemicals including salt, chlorine, and caustic are less exciting,” Vanlancker says of several of the firm’s businesses. “Honestly, all the businesses are equally performing,

PPG plans next move after AkzoNobel rebuff

Paint giant PPG Industries is weighing its options now that AkzoNobel has rejected its third takeover proposal. PPG hasn’t said whether it will pursue a hostile bid—no easy task when a Dutch firm is the target. But it is open to further talks with AkzoNobel’s management. On May 8, AkzoNobel rejected PPG’s latest acquisition offer, saying it intends to move forward with its own plan to sell or spin off its chemical business within 12 months. PPG’s offer was valued at $28.8 billion in cash and stock. It also promised to pay AkzoNobel a “significant” fee should antitrust regulators block the deal because of the overlap in the two firms’ core paint businesses. The offer led to a May 6 meeting involving AkzoNobel executive chair Ton Buchner, AkzoNobel supervisory board chair Antony Burgmans, PPG CEO Michael McGarry, and PPG lead independent director Hugh Grant, who is also CEO of Monsanto.

Bayer to divest Liberty Link

Bayer’s acquisition of Monsanto has received conditional approval from antitrust regulators in South Africa, the first country to rule on the merger. The country is requiring Bayer to divest its Liberty Link brand glufosinate herbicide along with its crop traits for glufosinate tolerance. Bayer acquiesced to the divestment but has not announced a buyer. The requirement is not surprising because Bayer and Monsanto sell the two most common herbicide and tolerance trait combinations. Monsanto’s glyphosate herbicide Roundup and its Roundup Ready crop traits are the world’s leading weed killer and trait combo. South Africa is requiring the buyer of Liberty Link to operate in the country to ensure farmers have access to both technologies. Competition in crop protection products has been a focus of regulators as large agriculture firms consolidate. Last month, DuPont sold much of its crop chemicals business to FMC to gain European approval for its merger with

Business Concentrates

Bayer’s acquisition of Monsanto has received conditional approval from antitrust regulators in South Africa, the first country to rule on the merger. The country is requiring Bayer to divest its Liberty Link brand glufosinate herbicide along with its crop traits for glufosinate tolerance. Bayer acquiesced to the divestment but has not announced a buyer. The requirement is not surprising because Bayer and Monsanto sell the two most common herbicide and tolerance trait combinations. Monsanto’s glyphosate herbicide Roundup and its Roundup Ready crop traits are the world’s leading weed killer and trait combo. South Africa is requiring the buyer of Liberty Link to operate in the country to ensure farmers have access to both technologies. Competition in crop protection products has been a focus of regulators as large agriculture firms consolidate. Last month, DuPont sold much of its crop chemicals business to FMC to gain European approval for its merger with

Sun Chemical acquires RJA Dispersions business

Sun Chemical acquires RJA Dispersions business

BASF transfers leather chemicals business to Stahl

BASF transfers leather chemicals business to Stahl

AkzoNobel to exit chemicals within 12 months

AkzoNobel intends to divest its chemicals business within the next 12 months. The move will return more money to shareholders than would accepting an unsolicited takeover offer from PPG Industries, AkzoNobel’s CEO Ton Buchner told analysts at a London briefing on April 19. AkzoNobel said it will either float shares of its chemicals business on the stock market or sell the business as a whole to another company. Analysts estimate it will fetch between $8 billion and $12 billion. The divestment will create a chemicals business with annual sales of $5.0 billion, pretax profits of $1.0 billion, and about 9,000 employees. The business has five key units: surfactants, ethylene oxide and derivatives, polymer chemicals, chlorine-based chemicals, and bleaching chemicals. The sale will leave AkzoNobel as a paints and coatings company with annual sales of $10.0 billion, pretax profits of $1.2 billion, and about 37,000 employees. A sale or share flotation

Canadian oil-field chemical business sold

Canada’s Secure Energy Services is buying Canadian oil-field chemical operations from an undisclosed U.S. company for $22 million. The assets are likely from Lubrizol, which in March announced it was winding down its oil-field chemical operations, obtained mostly from the 2014 purchase of Weatherford International. As part of its exit, Lubrizol said it was exploring the sale of its Canadian unit. Secure Energy is getting a plant in Red Deer, Alberta, and labs in Edmonton, Alberta. Both are locations where Lubrizol operated facilities. Lubrizol won’t confirm if it is the seller.

Chemical deals plummet

Chemical industry merger and acquisition activity fell sharply in the first quarter, according to a new analysis by the consulting firm PwC. The total value of announced deals was $19.8 billion, down 57% from the previous quarter and 67% from the first quarter of 2016. DuPont’s swap of its crop protection chemicals business for FMC’s health and nutrition business accounted for a large part of the value. Twenty-eight deals were announced in the quarter, down 22% from the previous quarter but up 45% from the year-ago quarter. Deals involving industry investors accounted for 65% of the value, according to PwC; financial investors, such as private equity firms, made up the rest. Companies from Asia and Oceania were the biggest targets in the quarter. Companies in North America were the biggest acquirers.

Merck KGaA: Sole survivor

Bayer, Hoechst, ICI, Rhone-Poulenc, Solvay, and other European corporate giants broke their drug and chemical businesses into separate firms in the name of progress and shareholder value. Today, Darmstadt, Germany-based Merck KGaA is the only major European company making both chemicals and pharmaceuticals. Merck’s performance materials business, featuring its chemical activities, posted a decline in sales last year, putting pressure on the company to take action. In 2014, facing similar conditions, Bayer decided to sell off its MaterialScience business, ending 150 years of industrial chemical production at the company. While some Merck watchers might consider it time for a breakup there as well, the firm’s chief executive officer, Stefan Oschmann, made clear at its recent financial results briefing that he intends to keep the business together. Merck is different, Oschmann said, and he expects unique synergies between its businesses to emerge with the digitization of health care. The sales slip

AkzoNobel rejects PPG’s second bid

AkzoNobel has rejected a second takeover bid from PPG Industries, this time for $26.3 billion. PPG made its initial offer of about $22 billion on March 2. The two paint companies appear to be some distance from agreeing to a deal. PPG says the Dutch firm refused to meet and rejected the revised offer one day after it was made. AkzoNobel says the new proposal doesn’t reflect the firm’s plan to spin off its chemicals business and will lead to significant job cuts. Four Dutch provinces have released a statement suggesting the takeover could result in the loss of 5,000 jobs in the Netherlands.

BASF leather business goes to Stahl

BASF has agreed to sell its leather treatment chemicals business to the Dutch firm Stahl. BASF will receive a 16% share in Stahl as part of the transaction, which includes BASF’s leather chemicals plant in L’Hospitalet, Spain. About 210 BASF staffers will transfer to Stahl, of whom about 110 are in Asia. Under the agreement, BASF will also provide significant volumes of leather chemicals to Stahl for the “mid- to long-term,” BASF says. Stahl, which has more than 1,800 employees, says the combined business will have annual sales of more than $900 million.

Strategic management accounting in the system of the chemical industry business processes controlling

The article examines the problems and prospects of development of chemical industry at the present stage of economic development, the special importance of the management accounting system by business processes focused on strategic development of the company is noted. The conclusion about the necessity of construction of accounting management with the specified parameters volumetric analyst of financial responsibility centers and business processes as information and analytical basis of controlling was made.

Rejecting PPG bid, AkzoNobel will exit chemicals

AkzoNobel has rejected an unsolicited takeover offer from PPG Industries and says it will instead embark on a program to separate its specialty chemical business from its main business in paints and coatings. PPG privately proposed on March 2 to acquire AkzoNobel in a deal that would value the Dutch company at about $22 billion. AkzoNobel says it rejected the proposal as not in the interests of its stakeholders. PPG says it will consider its path forward. AkzoNobel’s stock rose more than 15% after the disclosures, indicating that investors are betting PPG will come back with a higher offer. PPG and AkzoNobel each have annual sales of roughly $15 billion. And the two companies have done business before. In 2013, PPG acquired AkzoNobel’s North American decorative coatings business for about $1 billion. Both companies are largely paint makers that also operate chemical businesses. Both have pared back their chemical operations—PPG

Berkshire loses, gains in chemicals

Berkshire Hathaway’s Lubrizol unit is winding down its oil-field services unit due to a downturn in the oil industry. The move generated a 2016 loss of $365 million for the company. The wind-down includes the sale of Integrity Industries, which Lubrizol acquired as part of its 2014 purchase of the oil-field chemicals business of Weatherford International. Lubrizol will also shutter or sell parts of the business and absorb other lines into the Lubrizol additives business segment. Separately, Berkshire realized a $1.2 billion gain from the conversion, last December, of Dow Chemical preferred stock into common shares, which Berkshire subsequently sold. Berkshire had been receiving dividends of $255 million per year from Dow on the $3 billion worth of preferred shares it purchased back in 2009.

Carving out a niche in lab chemicals

The research chemical industry is largely one of two extremes. On one end is the 800-lb gorilla created in 2015 when Merck KGaA acquired Sigma-Aldrich. On the other end are the many small specialists that dot the scene. Arnaugh Verhaeghe sees opportunity in between. Verhaeghe is general manager of Honeywell Research Chemicals, a midsized lab chemicals business that Honeywell created late last year by combining a small business it owned with one it acquired. To his eye, there’s room in the middle for an ambitious company that wants to get bigger. Honeywell Research Chemicals owes its existence to Merck’s acquisition of Sigma-Aldrich. When Merck announced the $17 billion purchase in September 2014, both it and Sigma-Aldrich were already large research chemical suppliers. Regulators in Europe reviewed the deal and decided that the resulting firm would command too large a position in certain high-purity inorganic chemicals and solvents. Specifically, the European

French pharma chemical firms assert their culture

A years-long upturn in the pharmaceutical chemicals business has left many companies with a lot of cash on hand. Players are weighing acquisitions far afield, many of them European and Asian firms looking to invest in the U.S. Everybody seems to be on the verge of something transformational. In other ways, though, the pharmaceutical chemicals business has an immutable regional quality—one that is well illustrated by the French. Contract manufacturing organizations there are pursuing world markets, and some are expanding outside the country. But they remain purposely rooted, committed to a European approach to high-quality manufacturing despite France’s comparatively high costs and exacting environmental, health, and safety standards. No company is more quintessentially French than Isochem. The company, once the fine chemicals division of the former state-owned explosives and munitions manufacturer SNPE, operates three manufacturing facilities situated in a ring around Paris. These are long-standing sites, dating back to SNPE.

C&EN profiles Solenis, a new firm enjoying an investment spurt

Solenis, Ashland’s former water treatment chemicals business, is now in growth mode, says its chief executive officer, John Panichella. Six acquisitions in the past two years, investments in capacity, and new water chemistry monitoring technology are aimed at reviving a business that was pretty much on hold since 2008. Setting the scene for Solenis’s newfound emphasis on growth was its acquisition for $1.8 billion in August 2014 by Clayton, Dubilier & Rice (CD&R), a private equity firm that also owns the chemical distributor Univar and the industrial packaging firm Mauser Group. Whether that growth leads to an initial public offering of Solenis sometime down the road or its purchase by a strategic buyer really doesn’t matter, Panichella says. More important, he says, is doing right by a business that hadn’t made an acquisition since Ashland took it over in 2008 as part of its purchase of the specialty chemical maker