Evonik Acquiring Porocel for $210 Million
In a move designed to boost its catalyst business, Evonik will pay $210 million to acquire the Porocel Group, a US technology provider based in Houston, Texas. The transaction, to be financed out of Evonik's “strong cash position,” is due to close by the end of 2020 subject to regulatory approval.
The acquisition price is based on an enterprise value of 9.1 times adjusted EBITDA in 2019, which CEO Christian Kullmann said is “an attractive valuation for a high-quality asset in the catalyst sector.”
Kullmann said the purchase “further sharpens” the German specialty chemicals producer’s portfolio of high-margin specialty chemicals. Porocel's core competence, he said is an efficient technology for purification adsorbents, sulfur recovery catalysts and hydroprocessing services highlighted by rejuvenation of used desulfurization catalysts.
A major advantage of the deal is that the Texas firm has unused production capacity, which will enable its new owner to speed up expansion of its existing business with fixed-bed catalysts. The buy also gives Evonik access to major customers in the refinery and petrochemicals sector.
In 2019, the technology specialist, which employs more than 300 people worldwide and operates production facilities in the US, Canada, Luxembourg, and Singapore, reported sales of around $100 million and EBITDA of about $$23 million.
Driven by new product development through an expansion of R&D capabilities. Porocel has increased its EBITDA “significantly” in the past three years, Evonik said, with an EBITDA margin of around 23%, which is above the Essen-based chemical group target range of 18-20%.
The Texas player’s global position, said to be “a complementary fit with Evonik's catalyst activities, is expected to strengthen the buyer’s worldwide presence. Adding Porocel’s figures, the chemical producer should be able to lift sales of its catalyst business to well over €500 million by the end of 2025 without the need to invest in new capacity.
Evonik noted that desulfurization catalysts are increasingly being used to produce low-sulfur fuel and that the rejuvenation process can reduce carbon-dioxide emissions by more than 50% compared with the production of new desulfurization catalysts.
Author: Dede Williams, Freelance Journalist
