November 8, 2018 / 8:27 AM / 8 months ago

UPDATE 1-Evonik to buy PeroxyChem for $625 mln to bolster peroxide business

* Deal to complement Evonik’s peroxide business

* Pays 10.4 times adj EBITDA, 7.8 including synergies

* Shares down 3 percent in early trade (Adds shares, CEO comment, background on strategy)

By Ludwig Burger

FRANKFURT, Nov 8 (Reuters) - German chemicals maker Evonik agreed to buy U.S. group PeroxyChem for $625 million from buyout group One Equity Partners to bolster its peroxide bleaching agents business and shore up revenue growth.

The deal, which Evonik expects to wrap up by mid-2019, would allow it to participate in above-average growth rates of around 6 percent in the hydrogen peroxide and peracetic acid markets, it said in a statement on Thursday.

The substances are used as bleaching agents in the paper industry, as disinfectants for food processing or for wastewater treatment.

“We are expanding our portfolio of environmentally friendly and high-growth specialty applications,” Chief Executive Christian Kullmann said.

The purchase price including assumed debt amounts to 10.4 times the target’s annual adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), or 7.8 times when taking targeted synergies into account.

Evonik, controlled by a German public-sector trust, is slashing administrative costs and buying high-growth businesses to shore up its stock, which analysts say is trading below the industry average.

Having purchased additives businesses from Air Products and J. M. Huber’s silica operations, Evonik is in the process of picking a buyer for its methacrylates and clear acrylic sheet business by the first quarter of next year.

Still, Evonik shares fell 3 percent in early trade on Thursday.

Reporting by Ludwig Burger, editing by Riham Alkousaa

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