Citi ups rating on Croda following Iberchem deal

Citi has upgraded Croda International to a ‘buy’ following the chemicals group’s €820m acquisition of Spain’s Iberchem.

The UK firm, which has secured a contract to supply ingredients for Pfizer’s Covid-19 vaccine, announced on Wednesday that it had agreed to buy the fragrances firm, a specialist in emerging markets, from its private equity owners.

Citi said the deal was a "step change".

Analyst Mubasher Chaudhry said: "The deal, we think, provides Croda with access to the fastest-growing regions within the fragrance space, the ability to realise significant revenue synergies through cross-selling, and an opportunity to partake in what is a rapidly consolidating industry.

"Double digit growth in life sciences, increased markets to growing in personal care, and a strong balance sheet to support inorganic growth presents a compelling investment case."

Around 83% of Iberchem sales are in emerging markets.

As at 0935 GMT, shares in Croda were ahead nearly 2% at 6,358.0p.