Croda sells most of PTIC to Cargill
Croda has agreed to sell most of its Performance Technologies & Industrial Chemicals (PTIC) business to Cargill Velocity Holdings, a wholly owned subsidiary of Cargill in a €915 million deal should close in the summer of 2022, subject to regulatory approvals and consultation with employee representatives. The company had stated its intention to reviewing ownership options for PTIC in May 2021.
Cargill said that this would “dramatically expand” its bioindustrial footprint, a priority exemplified by the recent expansions of its QORE and NatureWorks joint ventures and the acquisitions of Floratech and Arkema’s epoxides business. “Aligning with Cargill’s commitment to sustainability, more than two-thirds of the raw materials used to manufacture these solutions are bio-based and renewable,” the company added.
The sale will bring Cargill nearly 1,000 employees and five production facilities at Gouda, Netherlands, Hull, UK and the Croda Sipo JV in China, in which Croda has a 65% stake. These mainly go into the circular plastic economy, electric vehicles and other renewable technologies.
The transaction also brings laboratory facilities supporting activities in smart materials, energy technologies, and industrial chemicals. If the full sale of the JV cannot be realised, Croda added, Sipo will be excluded and the value of the sale will fall by €140 million. Together, the divested activities accounted for 77% of PTIC’s revenues of £470 million in 2020.
Croda is retaining the other parts that “provide integral support to the group’s consumer care and life sciences sectors”. They will henceforth be known as the Industrial Specialties sector. Agreements have been made to continue the supply of certain ingredients to each other.
Croda added that it intends to reinvest the proceeds into faster growth areas, increasing its exposure to health care and developing its position as a sustainability leader in consumer care and crop care markets. CEO Steve Foots said that the sale “completes our transition into a pure-play consumer and life sciences company”, with these accounting for “well over 90%” of its 2020 adjusted operating profits of £48.6 million.