Evonik has agreed to buy US hydrogen peroxide (H2O2) and peracetic acid (PAA) producer PeroxyChem from One Equity Partners for $625 million.

The deal, set to close by mid-2019, will add eight production sites located mainly in North America, but also in Germany, Spain and Thailand.  Evonik previously acquired PeroxyChem’s Dutch business in October 2015, adding a plant in Delfzijl.

“PeroxyChem will significantly strengthen our growth segment Resource Efficiency,” said Christian Kullmann, Evonik’s chairman. “We are expanding our portfolio of environmentally friendly and high-growth specialty applications. Furthermore, we are getting an attractive business characterized by above-average growth, moderate capital intensity and low cyclicality.”

Bruce Lerner, PeroxyChem’s president and CEO, added that the complementary fit of the two businesses will unlock “new and attractive growth opportunities”.

The H2O2 and PAA markets are growing at above-average rates, particularly specialty applications, which are expanding at an annual rate of about 6%, according to Evonik. PeroxyChem generates around 75% of its earnings from specialty applications in the environmental, food safety and electronic semiconductor sectors.

Ute Wolf, Evonik’s chief financial officer, said the Philadelphia-headquartered company is highly profitable. “With an adjusted EBITDA margin of about 20%, profitability is constantly above Evonik’s current group margin,” she noted, adding that PeroxyChem also generates attractive free cash flow.

PeroxyChem expects to achieve revenues of approximately $300 million and an adjusted EBITDA of about $60 million for the 2018 fiscal year.

Evonik is anticipating synergies from the combined business of $20 million by 2022 as a consequence of complementary operations and logistics, an expanded product portfolio and new technologies.

Commenting on the acquisition, Markus Mayer, an analyst with Germany’s Baader Bank, said given the strong synergy potential, the purchase price of $625 million “does not seem too high and the acquisition is a good deal.”

Investor group One Equity Partners acquired PeroxyChem – formerly FMC Global Peroxygens – in March 2014. Since that time, the US producer has made two acquisitions to boost its food safety and energy segments and invested in an H2O2 purification plant for the the electronic sindustry  in Saratoga Springs, New York, and a wastewater treatment facility in Memphis, Tennessee.