Evonik acquires Porocel for US$210 mn to accelerate growth of catalysts business

German chemicals firm Evonik is acquiring the Porocel Group for US$210 million to accelerate the growth of its catalysts business. Based in Houston, Texas (USA), Porocel offers a technology for highly efficient rejuvenation of desulphurisation catalysts, which are in increasing demand to produce low-sulphur fuel. Rejuvenation reduces carbon-dioxide emissions by more than 50% compared with the production of new desulphurisation catalysts. In addition, Porocel has available production capacity, enabling Evonik to speed up expansion of its existing business with fixed-bed catalysts.

“This acquisition is the next logical step in the strategic development of our portfolio. Our focus is on stable and high-margin specialty chemicals,” said Christian Kullmann, chairman of the executive board. “We are systematically expanding the share of our specialty businesses – and that at an attractive valuation.”

The transaction is expected to close by the end of 2020 and is subject to approval by the relevant authorities. Porocel generated sales of approximately US$100 million and EBITDA of about US$23 million in 2019. The EBITDA margin at around 23 percent is above Evonik’s target range of 18-20%.

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Porocel has increased its EBITDA significantly in the last three years, driven by new product development through an expansion of research and development capabilities. The company has more than 300 employees worldwide and production facilities in the US, Canada, Luxembourg, and Singapore.

Porocel’s global position strengthens the worldwide presence of Evonik’s catalyst activities. The complementary fit to Evonik’s existing catalyst portfolio and especially the available production capacities offer considerable growth opportunities. Evonik expects to increase sales of the combined catalyst business to significantly more than EUR500 million by the end of 2025 without the need for investment in new capacities.

Catalysts are essential for the production of many chemical products and for production of clean fuels. The market is characterised by a broad spectrum of applications and robust growth of around 4% with low cyclicality.

“Sustainability and especially circular economy play a decisive role for us when it comes to acquisitions and the orientation of our portfolio,” said Claus Rettig, head of the Smart Materials division. “With the acquisition of Porocel we are meeting increasing demand that is coming from a trend towards sulphur-free fuels as well as reducing CO2 emissions and saving resources. The catalyst rejuvenation process results in significantly less CO2 emissions than the manufacture of fresh catalysts, while yielding comparable efficiency and at a much lower cost.”

The acquisition gives Evonik access to major customers in the refinery and petrochemicals sector. Porocel’s core competence is an efficient technology for purification adsorbents, sulphur recovery catalysts and hydroprocessing services highlighted by rejuvenation of used desulphurisation catalysts.

The transaction will be financed out of Evonik’s strong cash position.