The latest divestment, which follows Arkema’s sale of its functional polyolefins business to Korea’s SK in June, increases the share of specialty materials in the company’s turnover total from 79% to 87%, based on 2019 pro forma figures.

In shedding the business, the French chemical producer said it is taking another major step in its targeted transformation into a pure specialty materials player by 2024, focusing on Adhesive Solutions, Advanced Materials, and Coating Solutions.

Arkema said the sale to Trinseo “offers great development opportunities for the PMMA business over the long term.” The business is back-integrated from methyl methacrylate (MMA) to the polymer, which is marketed as Plexiglas in the Americas and Altuglas elsewhere – outside the America’s the Plexiglas trademark belongs to German’s Röhm. 

The soon to be former Arkema arm claims leading commercial positions as a supplier to automotive OEMs as well as to applications in construction, signs & displays, and the sanitary sector. The business employs some 860 people at seven production sites, including four in Europe and three in North America.

Sales of the Arkema methacrylates activities in 2020 are projected to be close to €510 million with EBITDA estimated at €122 million. While the figures are lower in comparison with 2019, when EBITDA came at 160 million, the company said the performance was “solid in the context of Covid-19.”

Trinseo CEO Frank Bozich called the deal with Arkema a “highly synergistic acquisition,” which he said will be the first step and a “key catalyst” in the company’s own portfolio transformation, e that will eventually leadning it to divest lower-margin businesses. Presenting third-quarter results, he hinted at the potential sale of the rubber activities.

The new addition will complement the Pennsylvania-based producer’s range of performance plastics, including ABS and PC and is expected to strengthen its positions in the automotive, construction and lighting markets. Along with the engineering thermoplastics, Trinseo – which began life as a spinoff of Dow Chemical – focuses on styrenics as well as latex binders and synthetic rubber.

Adding PMMA, Bozich said, will make Trinseo – with sales of $3.8 billion in 2019 from 17 worldwide production sites andma workforce of 2,700 people – a higher margin, less cyclical solutions provider. He noted that Arkema’s PMMA business “has consistently delivered attractive margins with products serving many of Trinseo’s end/markets.”

The acquisition is expected to generate around $50 million in annual pretax cost synergies by 2023 for the US company, along with creating additional revenue synergies by leveraging its market overlap and existing Asia organization to accelerate growth. Around 70% of the PMMA market is in Asia.

Through harmonizing global ERP systems, Trinseo also expects to realize an additional $25 million in IT-related productivity savings in its existing businesses. These savings represent “meaningful benefits” above and beyond the PMMA-related synergies, Bozich said.

Author: Dede Williams, Freelance Journalist