27 Dec 2012

Clariant sells its paper chemicals business after years of strategic drift and wandering.

Following earlier announcements that Clariant will off-load its unprofitable businesses, it has now been announced that agreement has been reached with US PE firm, SK Capital, to sell its paper business (and textiles, emulsions).  The sale amounts to about CHF 502 million, of which approximately CHF 460 million will be cash.  This is said to be equivalent to 6.3 times the estimated full year 2012 recurring EBITDA.  It is now a matter of waiting for regulatory approval.

This ends Clariant's years of strategic drift and wandering in businesses which had increasingly moved from being specialities based in high-cost countries, to more commodity-based businesses where quality competition from China and India had started to dominate.

It will be interesting to see what SK Capital do with these businesses ....... there are certainly many opportunities for improvements in costs, operation and strategy.  Further divestment of businesses and IP could also bring reward to SKC.

Clariant's announcement --> click here

1 Oct 2010

AkzoNobel's Divestment of National Starch Completed

AkzoNobel has finalised the $1.3bn sale of its National Starch business to Corn Products International. The transaction was announced on June 21, 2010.

"National Starch was taken over by AkzoNobel as part of its acquisition of ICI in 2008, but did not offer sufficient opportunity to create value within the company's transformed portfolio."

Corn Products International is one of the world's largest suppliers of food ingredients and industrial products derived from the wet milling and processing of starch-based materials and has its HQ in Westchester, Illinois, USA.

There will be further consolidation of the starch industry as European subsidies disappear.

30 Sep 2010

Kemira closes Blankophor GmbH & Co. KG (German Catec GmbH)

Kemira Oyj has on September 30, 2010, closed Blankophor GmbH & Co. KG (German Catec GmbH) following the deal announced on June 23, 2010.

Kemira sold its global Fluorescent Whitening Agents (FWAs) business to Blankophor. The parties have agreed not to disclose the transaction price.

The traditional European, high-cost manufacturers of optical brightening agents (OBA) or FWAs continue to struggle as these commodities are easy to source form Indian and Chinese producers at similar quality but much lower price.

23 Jun 2010

Kemira sells its global FWA business

Reported in the press this morning:

Kemira Oyj and German Catec GmbH financially supported by Fengler Beteiligungs GmbH have signed a contract, according to which Kemira sells its global Fluorescent Whitening Agents (FWAs) business to Catec. FWAs improve the whiteness and brightness of paper. The deal covers a production plant in Leverkusen, Germany, the global FWA sales network and the associated support functions. The FWA business and its staff of about 100 persons will be transferred to the new owner once the companies have closed the transaction in August 2010.

The transaction does not have any significant impact on Kemira's financial figures, and the parties have agreed not to disclose the transaction price.

"Kemira is focusing according to its strategy on products and services that enhance the water quality and quantity management in the water intensive industries such as pulp and paper industry. Exiting FWA business is in line with our strategy to enhance the product lines which are common for all our segments and on which we are building our competitiveness", states Petri Helsky, head of Paper segment.

FWAs or OBAs are widely used in the paper industry for producing white paper. A low-margin, commodity business where the major companies, BASF (Ciba), Clariant and Kemira have struggled to compete against quality market entrants from China and India.

25 Dec 2009

Seasons Greetings

Seasons greetings form the paper chemicals weblog. Thank you for your support and interest throughout the year.

2 Dec 2009

The paper chemicals weblog on twitter

The paper chemicals weblog has also been sharing news, information and views on the paper chemical industry with fellow tweeters ........ follow us on twitter at @paperinsight ..........

4 Nov 2009

Clariant beats expectations and shows 3Q09 profit. Paper chemical business remains weak.

Clariant reported its third quarter 2009 results and overall the company showed better than expected performance, showing a profit driven by restructuring and a higher capacity utilisation. 3Q09 Sales were down 14% in local currencies and 19% in Swiss Francs. The high Euro high Swiss Franc situation had a negative impact on the results.

Details of Clariant's performance are given on their web site.

In the webcast, Patrick Jany stated, 'The paper business remains weak and shows no sign of improvement'.

24 Oct 2009

Use paper towels for dying your hands - Cascades report

Cascades reinforces the advantages of using paper towels for drying hands - 'hand paper towels are the most hygienic choice for drying your hands'. They show a study comparing the drying efficiency and bacterial contamination of conventional warm air dryers, new high-performance air jet dryers and hand paper towels.

19 Oct 2009

Cascades opens new green building in Lachute

Cascades of Canada, a leader in green packaging and fibre recovery, announced it had opened its first LEED ('Leadership in Energy and Environmental Design') certified building as part of the expansion of its tissue paper facility in Lachute, Quebec.

7 Oct 2009

Van Houtum Papier target battle against influenza with C2C paper

van Houtum Papier (VHP) was the first paper company to produce Cradle to Cradle paper towel and toilet paper. In the current period of uncertainty regarding influenza in its many forms, especially swine flu, the paper towel offers one of the best options for drying hands. The VHP C2C paper towel is disposable and why not use a sustainable paper grade to wipe your hands, especially when it has been certified as C2C. C2C certification ensures that the best measures are taken to make the paper either recyclable or biodegradable

Why not join the Cellulose Community?

The Cellulose Community:

'The Cellulose Community is a worldwide group, believing general pulp and paper information should be fast, free, or at a very low cost'.

The community provides a network of like-minded people and there are now 345 members. The Cellulose Community is also featured on LinkedIn (661 members).

Why not join our Cellulose Community?

1 Oct 2009

Clariant a target for Solvay's cash?

After Solvay sold its drug unit, Abbott, on Monday for EUR4.5 billion, speculation has started as to what Solvay will spend the money on. In a Reuters article, it was pointed out that the ailing Clariant could be a target.

Clariant's share price rose by as much as 4% on the back of the speculation, but many analysts remain sceptical.

29 Sep 2009

DyStar files for Bankruptcy

Following earlier rumours, it has now been confirmed that DyStar Textilfarben GmbH, DyStar Textilfarben GmbH & Co Germany and DyStar Holdings have all filed an insolvency petition with the local court in Frankfurt for the company's operations in Germany.

The insolvency petition includes the company's sites in Frankfurt, Leverkusen, Brunsbuttel, Geretsried and Ludwigshafen which in total employ around 1,300 people.

It has been stated that the insolvency filing was necessary after DyStar exhausted alternative solutions to their liquidity problems.

DyStar hold a wealth of dyes technology and it will be interesting to see where it all ends up.

DyStar to file for bankruptcy

The rumour mill has picked up that DyStar will file for bankruptcy. The company's market focus is on textiles and leather and not the paper industry.

DyStar is a conglomeration of textile dyes businesses - founded in 1995 as an amalgamation of the Bayer, Hoechst and Mitsubishi textile dye businesses, they later acquired the BASF, Mitsui, Zeneca, Colour Solutions and Yorkshire Americas businesses. In 2004 DyStar was acquired by the private equity company, Platinum Equity and is recognised as a leader in the textile and leather markets

More news is expected, but the complex collection of companies in a rapidly changing market may have proved too difficult for the private equity company in the 'credit crunch' era. There will surely be some interest from the surviving market players in purchasing some or all of DyStar; however, it is a good opportunity to take capacity out of the ailing European market.

7 Sep 2009

50 million chemical substances! CAS reaches milestone.

On the 7th september, 2009, the Chemical Abstracts Service (CAS) announced that it had registered its 50 millionth substance --> CAS 1181081-51-5, a novel heterocycle with analgesic properties.

The 40 millionth substance was registered just 9 months ago, indicating an acceleration of the sysnthesis and innovation in science. We are not voulnteering to do the research, but it would be interesting to know how many paper chemicals there are among the 50 million.

4 Sep 2009

Clariant sells USA silicone business

Clariant has sold its silicone business based in Gainesville, Florida to SiVance LLC, an affiliate of GenNx360 Capital Partners, a private equity comany. This has little impact on Clariant's paper chemical business.

30 Jul 2009

Kemira's paper chemicals business struggles on

Kemira announced their first half 2009 results - as is the norm for this sector at the present time, sales decreased - Kemira's overall sales decreased by 5% for the period April-June, 2009 - as customer demand decreased.

For the paper business its seems to be a trend to using hyperbole (eg Clariant's use of the word MASSIVE) - For Kemira, 'The paper segment's revenue in April-June shrank by 8% to EUR221.6 million as demand in customer industries PLUMMETED.'

If interested in the detail, see the Kemira web site. What is refreshing about Kemira is that their business is transparent and unlike some companies (eg Clariant, BASF/Ciba, Ashland) it is possible to see exactly how their paper chemicals business is performing.

Clariant experience 'massive' decline in sales for 1H09

Clariant announced their first half 2009 sales with a degree of honesty which was unusual for the conservative Swiss company:

'Despite persistent poor business conditions resulting in a massive decline in sales, the Textile, Leather and Paper Chemicals Division returned to profitability at the operating level. Sales dropped 22% in local currencies and 25% in Swiss francs.'

The outlook? As we have stated before, this is a watershed year for the paper chemicals business which requires new vision and leadership.

Some recent reports (see bloomberg.com):
22-Jun-09: Clariant, the world’s largest maker of chemicals used in printing ink based in Muttenz, Switzerland, said on June 22 it plans to cut additional jobs on top of 1,350 reductions announced earlier this year.

02-Jul-09: Clariant AG dropped 8.6 percent to 6.36 Swiss francs for the biggest decline on the Stoxx 600. The world’s largest maker of chemicals plans to sell 225 million francs ($209 million) of convertible bonds.

13-Jul-09: Clariant, The world’s biggest maker of chemicals used in printing ink expects monthly profit of as much as 18 million Swiss francs ($16.6 million) in the “coming period,” Finanz & Wirtschaft said, citing an interview with Chief Executive Officer Hariolf Kottmann. Clariant will probably cut more jobs this year and in 2010 before restructuring is complete, he said.

30-Jul-09: Clariant, the world’s biggest maker of chemicals used in printing ink reports first-half earnings. The shares rose 2.1 percent to 6.96 francs.

15 Jul 2009

After 65 years Buckman adjusts its brand

Buckman Laboratories has announced that it will 'rebrand' itself, shed the 'laboratories' and become Buckman. In an announcement which resembles a rite of passage, Buckman has decided to shorten its name and recognise, 'Its growth from a small laboratory selling a few chemicals to a global supplier .......... ' C'est la vie. For the skeptic, this is just one of those meaningless and costly exercises. For the branding enthusiast it is a chance to refresh the message given to customers.

Buckman is undergoing changes and was a fully grown company many years ago. In the last few years it has faced challenges so perhaps now is the time to go for it and drop the Laboratories! Most of us knew the company as Buckman anyway so loosing the long name is a help!

6 Jul 2009

BASF Blitz Ciba - 3,700 jobs to go in an EU approved acquisition.

In a not too surprising move, BASF announced that it will further its own agenda and slash the newly-acquired Ciba Specialty Chemicals organisation. In the rather disjointed announcement (lost in the translation, if you want to be kind), BASF announced:

  • 23 of the sites acquired with Ciba are under review (management or poor PR speak for, 'Will be shut')
  • Synergies of at least EUR400 million per year, in other words, site closures and the planned loss of 3,700 jobs - synergies is a rater out dated word!
  • Fair and transparent decisions - a PR strip line which has no credibility whatsoever. BASF decide and you will obey! It bewilders us why large companies continue with their old fashioned PR statements - no one believes that the decisions are fair or transparent! We planned it, you do it and those we want will be employed as long as you support our decisions! Too cruel? Not according to our feedback.
Perhaps, for the paper chemicals business there are some glimmers of commitment. The centre for the business will be in Basel (a tax dodge), but feedback from the people based in Ludwigshafen is far from positive - many will not move to Switzerland and why should the heart of the business be relocated to save taxes - the EU needs to take a stand against the Swiss and support its EU members. Clariant, Hercules, BASF .......... how many more will dodge paying EU taxes?

In a straw poll of the paper industry there is a decided unease regarding the merger and a general belief now that the trend to consolidation ('one stop shop') has had its day and the opportunities for India, China and smaller companies is gaining momentum. The growth in the importation of paper chemicals into the EU bears testament to this view.

Keep posted as we gather more information regarding exactly what BASF intends to do with Ciba ............. so far the message is that they are taking a supplier out of the market. The strategy will not be easy to implement!