Grace buys Albemarle FCS

W.R. Grace & Co. has agreed to acquire the Fine Chemistry Services (FCS) business of its fellow US speciality chemicals company, Albemarle, in a deal that is expected to close in Q2, subject to regulatory approvals and other customary conditions. This will bring Grace sites at Tyrone, Pennsylvania, and South Haven, Michigan. FCS will fit within Pharma & Consumer, which Grace described as “the largest, fastest growing and most profitable sub-segment” in its Materials Technologies business.

The deal is value at $570 million, or 9.5x EBTIDA. This comprises $300 million in cash on closing, which is expected to be in Q2, subject to regulatory approvals, and the rest in issuing non-participating preferred equity in a new Grace subsidiary to Albemarle.

“This acquisition is strategically and financially compelling and aligns perfectly with our strategy of building a higher growth portfolio by extending our existing capabilities into higher-growth, high-value end markets,” said Hudson La Force, president and CEO.

The company added that the acquisition will be accretive to its growth rate, EBITDA margin and adjusted EPS in 2021, adding $60 million in full-year run-rate EBITDA. It expects modest near-term cost synergies with greater commercial and capital avoidance synergies over the longer-term”.

In addition, FCS will expand Grace’s existing pharma portfolio of chromatographic resins, excipients and drug delivery, pharmaceutical intermediates and APIs. Grace will “be better positioned to address customers’ broad needs as a fully integrated development and manufacturing solutions provider”, it claimed.

Albemarle is increasingly focused on lithium, bromine and refining catalysts and had previously sought a buyer for FCS, but could not attract the price it wanted.  CEO Kent Masters said that the sale “reflects our ongoing commitment to actively and continuously refine our portfolio as we focus Albemarle on its core, growth-oriented business segments”.