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.

Context News

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.

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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