Glued to growth

2 March 2017 By Olaf Storbeck

The German consumer group is offering $1 bln for GCP Applied Technologies’ sealants and coatings unit Darex. At 16 times the target’s operating profit, Henkel will struggle to cover its cost of capital. The pricey bid is a side-effect of the group’s over-ambitious growth targets.

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Henkel announced on March 2 that it had made a binding offer to buy Darex Packaging Technologies from GCP Applied Technologies for $1.05 billion.

Darex generated sales of around $300 million in 2016. In the first nine months of the year, its operating profit margin, adjusted for one-off items, was 22 percent. The group is the global market leader in can-sealants and has a strong position in coatings for metal packaging products. Henkel said it would finance the acquisition with a mixture of cash and debt.

United States-based GCP said a sale of Darex would allow it to focus on its construction and building-materials businesses. It will now begin consultations with workers' representatives and then enter into a definitive agreement with Henkel.

Henkel shares were down 0.1 percent at 119.3 euros by 1030 GMT on March 2.

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