Chemical romance

6 May 2016 By Kevin Allison

The U.S. industrial-gas producer is selling specialty chemicals to its German peer for $3.8 bln. A lofty valuation of 16 times last year’s EBITDA helps Air Products cover a tax hit triggered by the sale. To justify the price, Evonik is rustling up meaningful savings of its own.

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German chemical maker Evonik has agreed to buy some Air Products specialty-chemical assets for $3.8 billion in cash, the companies said on May 6.

Air Products had been planning a tax-free spinoff of its materials-technologies division to shareholders to focus on its industrial-gases business. The Pennsylvania-based company said it would continue to pursue a spinoff of its electronic-materials unit.

Evonik said it expects $60 million in annual cost savings by 2020 from folding Air Products’ coatings and additives business into its own and another $20 million a year in revenue synergies. It said the transaction also would create tax benefits with a net present value of $500 million.

Evonik’s shares rose 3 percent after the deal was announced. Air Products shares rose slightly in morning trading in New York.

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