Page 46 - Plastics News March 2019

BUSINESS NEWS

Milacron Holdings to invest $30 Evonik agrees to sell its

million in Gujarat Methacrylates business to Advent
International for €3 billion
ilacron Holdings Corp. plans
Mto invest at least $30 million
in a second plastics machinery vonik has signed an agreement to sell its
factory in India in the next two EMethacrylates business to Advent International for
years to handle growth , the €3 billion. The selling price (enterprise value) is 8.5
company's top executive said at a times the business’ EBITDA. The transaction is subject
recent trade show in the country. to approval by the authorities in several countries and
Currently, the company operates is expected to close in the third quarter of this year.
a plant in Ahmedabad, Gujarat, The Methacrylates business has 18 production sites and
where it makes about about 3,900 employees worldwide. From 2016 to 2018, the
2,400 injection and blow molding business generated an average annual EBITDA of about
presses annually. But that site is nearing capacity, Milacron €350 million and sales of about €1.8 billion per year.
CEO Tom Goeke said. "The existing site could produce up For 2019 Evonik expects sales and EBITDA at a similar
to 3,000 presses yearly with some more investment. The level.The transaction comprises the Methacrylates,
Gujarat plant could handle the demand up to the next two Acrylic Products and CyPlus business lines, and some
years only," Goeke said, adding that "capacity would likely of the methacrylate
be utilized fully by 2020 and a new production facility is resins activities.
required in 2021." Speaking at the recenty held Indiaplast Evonik put these
2019 Goeke said,"The new site involves an investment of operations on the
between $30 million-$40 million over a period of three market as part of its
years,".The company, which opened the Ahmedabad systematic strategy
factory in 1995, would likely put it close to the current of sharpening its
factory to capitalize on existing manpower."India's evolving focus on specialty
dynamics fits in to our growth strategy as there is a market chemicals, which are
opportunity to grow, availability of local talent to support less cyclical. Private
the growth and passion among the people to make that equity company
happen," he said..The second plant would likely be spread Advent International
over more than 320,000 square feet and add capacity is one of the most experienced financial investors in
of 2,000 presses annually, ramping up the cumulative the chemical industry in the world, with more than
capacity of two Indian plants to 5,000 units yearly. The 30 investments over three decades. The net purchase
new plant could add more capacity over time, he said. "We price (equity value) can be calculated after deductions,
are evaluating all options as it would either be greenfield made up primarily of pension obligations of around €500
or a brownfield facility which may involve buying out an million. Evonik will use the sale proceeds to strengthen
existing operational site," Goeke said. The company's
existing India factory makes injection presses from 50- its balance sheet and, above all, for targeted growth
projects. That includes funding the purchase price of
3,200 tons and exports about 35 percent of its production.
Goeke said India's economic growth and expanding plastic the US company PeroxyChem, which Evonik plans to
processing industry drives the investment. "With India's close this year. In addition, some funds will be used to
GDP surging at around 7.5 percent yearly, the plastic strengthen the present specialty chemicals portfolio,
business could go up at 8-10 percent annually as plastic for example, by building a new polyamide 12 plant in
consumption grows," he said. Milacron is a global leader Marl, Germany. These businesses generate an attractive
in the manufacture, distribution and service of highly margin and an above-average cash flow. Also in 2019 and
engineered and customized systems within the $27 billion even without the contribution from the Methacrylates
plastic technology and processing industry, the only global business, Evonik will be able to cover the dividend
company with a full-line product portfolio. payment out of its strong free cash flow.

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