Elkem Takes China’s Polysil

Norwegian silicon producer Elkem has agreed to take over Polysil, a leading Chinese manufacturer of silicone elastomers and resins. The deal, which values Polysil up to 941 million Chinese yuan, including potential bonus and earn-outs depending on pre-agreed criteria, is expected to close by the end of quarter one.

Headquartered in Zhongshan, Guangdong province, the privately owned firm has more than 350 employees and is expected to generate EBITDA of 110 million yuan for the 2019 fiscal year.

Polysil has strong positions in baby care and food-grade silicone as well as silicone products for the electronics and medical markets. In addition, it has leading technology positions for producing heat cured rubber, liquid silicone rubber and specialty resin and pressure sensitive adhesives. The company operates two production plants as well as a research and development center.

Elkem said the companies’ complementary product lines and market positions provide a solid platform for further specialization and growth, both in China and globally. Around 90% of Polysil’s revenues are generated in China – primarily south China, which Elkem said accounts for roughly half of all Chinese silicone rubber consumption.

“We are continuing to deliver on our growth and specialization strategy. Acquiring Polysil will strengthen our position in selected specialized silicones segments in China. There are considerable synergies in leveraging Elkem’s upstream capabilities to supply raw materials and intermediates, and in combining both the product portfolio and the domestic and global market positions of Polysil and Elkem,” said Elkem CEO Michael Koenig.

Frederic Jacquin, senior vice president of Elkem Silicones, added that Polysil’s strong R&D capabilities will be very important for developing products for both the Chinese and global markets.

The acquisition follows the purchase of South Korean specialty silicone gel producer Basel Chemie last August.