Elementis to buy specialty chemicals platform SummitReheis

Elementis has entered into an agreement to acquire specialty chemicals platform SummitReheis from an affiliate of One Rock Capital Partners for an enterprise value of $360m.

SummitReheis – which is expected to report revenue of $134m and underlying earnings before interest, taxes, depreciation and amortisation of $28m for the year ended 31 December – will become part of an enlarged personal care business within Elementis.

SummitReheis produces a range of critical active ingredients and materials tailored for use in personal care, pharmaceutical and dental products. Its anti-perspirant actives business, which accounts for more than 60% of sales, is the global leader in the manufacture and sale of active ingredients for anti-perspirants and has long standing relationships with key consumer product companies across the Americas, Europe and Asia.

Elementis said the deal will create an enlarged personal care business with annual sales of approximately $200m, significantly increasing the group’s presence in this important end market.

It also pointed to the enhanced growth potential driven by the combination of complementary products, customers and a broader geographic presence which together offer cross-selling opportunities.

The acquisition will be funded from cash resources and new debt facilities of $475m, which will be supported by the cash generation characteristics of the enlarged group. It is expected to deliver material earnings accretion and substantial free cash flow accretion in the current financial year.

Chief executive officer Paul Waterman said: “At our recent Capital Markets Day presentation, we highlighted the growth prospects in personal care as a key opportunity for Elementis, driven by long term positive demographic trends and an increasingly sophisticated consumer. Our leading position with proprietary hectorite and Rheoluxe rheology modifiers will be augmented by SummitReheis’ complementary position in specialty additives for anti-perspirants, pharmaceuticals and dental products.

“The group is well positioned to capitalise on this acquisition through the enhanced geographic footprint and strong customer relationships that it brings. Together with our existing business, the acquisition of SummitReheis is transformative for our personal care business, creating a substantial, high return platform that will help accelerate our Reignite Growth strategy.”