Evonik has acquired the silica business of US producer J.M. Huber for $630 million in a deal the German specialty chemicals producer said will allow it to expand its position in North America and Asia, while strategically develop its portfolio. CEO Klaus Engel said the acquisition of the “profitable and resilient business” will “significantly strengthen Evonik’s growth segment Resource Efficiency.

Huber Silica is expected to post sales almost $300 million US dollars and EBITDA of about $60 million in 2016, yielding an EBITDA margin of more than 20%. As the two companies’ businesses are highly complementary, Evonik said it expects to generate synergies of $20 million US dollars, largely in production, logistics and procurement as well as through “harmonization” of the portfolio.

All synergy effects are expected to be implemented by 2021, Evonik said in a statement without giving details.

Across a variety of applications, the silica market is showing above-average annual growth of 46%, the German company said. While Huber’s silica business is oriented especially toward consumer applications and the dental sector, Evonik’s has traditionally been focused rather on industrial applications, for example in the tire and coatings industries.

“Combining the complementary silica businesses of Evonik and Huber will strengthen an important pillar of our portfolio,” said Christian Kullmann, Evonik’s executive board member for strategy. He added that Huber “is an excellent regional fit with its focus on the US, China and India.

The depreciations customarily associated with asset deals will lead to lower future cash tax payments with a net present value of around 80 million US dollars. On this basis, the purchase price (enterprise value) including synergies and tax effects is about seven times the annual EBITDA, or 10.5 times before tax effects and synergies.

The depreciations customarily associated with asset deals will lead to lower future cash tax payments, at present expected to be worth around $80 million. On this basis, the purchase price (enterprise value) including synergies and tax effects is about seven times the annual EBITDA, or 10.5 times before tax effects and synergies, Evonik said.