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Germany's Evonik buys Huber's silica unit to boost speciality chemicals
December 9, 2016 / 12:39 PM / in a year

Germany's Evonik buys Huber's silica unit to boost speciality chemicals

DUESSELDORF, Germany (Reuters) - Germany’s Evonik (EVKn.DE) agreed to buy J.M. Huber Corp.’s [CPKEL.UL] silica unit for $630 million (501 million pound) to widen its speciality chemicals business, the company said on Friday.

The logo of German specialty chemical company Evonik Industries AG is pictured at their plant in Bitterfeld, Germany, February 29, 2016. REUTERS/Fabrizio Bensch

Evonik’s own silica products are mainly used to improve the wet grip of tyres. The deal with U.S. based Huber will widen its customer base to include makers of toothpaste, animal feed and paints, and give it better access to Asia, especially India.

“Huber’s business is especially oriented towards applications in the consumer goods industry, the dental sector for example. To date, Evonik’s silica business has been focused rather on industrial applications, for example in the tyre and coatings industries,” Evonik said in a statement.

The acquisition from family-owned Huber is expected to close in the second half of next year and follows an acquisition by Evonik in May to buy an additives businesses from U.S. group Air Products and Chemicals (APD.N) for $3.8 billion.

Evonik, controlled by a public-sector trust, has been seeking to cut its dependence on volatile animal feed ingredients and had been under pressure to return cash to shareholders if it could not secure deals.

Evonik shares rose 0.7 percent to 28.05 euros at 1543 GMT on Friday.

Evonik plans to finance its latest purchase from existing reserves and credit lines. The Huber unit has about $60 million in earnings before interest, taxes, depreciation and amortisation (EBITDA) on expected 2016 sales of close to $300 million.

Cost efficiency and sales benefits from folding the Huber unit into Evonik will add about $20 million to core earnings per year.

Evonik’s competitors in silica include Belgium’s Solvay (SOLB.BR), PPG Industries (PPG.N) of the U.S. and Taiwan’s OSC Group.

J.M. Huber, headquartered in Edison, New Jersey, said it would invest the proceeds in its engineered materials businesses.

Writing by Ludwig Burger; Editing by Alexander Smith and Elaine Hardcastle

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