Arch Chemicals says it has agreed to acquire water treatment chemicals producer Advantis Technologies (Alpharetta, GA), a subsidiary of Rockwood Holdings, for $130 million in cash. Advantis posted Ebitda of $12 million and sales of $71 million in 2007.
The deal is expected to close in the fourth quarter and be immediately accretive to Arch’s earnings. Arch also expects to yield annual pre-tax savings of about $6 million/year through synergies with its existing water products business. The deal will Campbell: Adds new be financed by Arch’s products. revolving credit facility. Advantis operates two divisions: Pool & Spa, which makes chlorine-free algicides, clarifiers, fragrances, and foam reducers; and Surface Water, which produces chemicals that control algae and aquatic vegetation in lakes, ponds, reservoirs, and drainage canals. It has a manufacturing plant at Alpharetta, as well as warehouses in Alpharetta; Germantown, WI; and Ontario, CA.
“The Pool & Spa division expands and improves our participation in the specialty pool and spa dealer channel, as well as with pool industry distributors, adding products and technologies that complement Arch’s existing product portfolio,” says Michael Campbell, Arch chairman and CEO. “The Surface Water division supports our strategy of growing our nonresidential water business,” Campbell says. Arch says that it has double-digit sales growth in that business.
The deal will boost Arch’s market share in water treatment chemicals from 18%, to about 21%, and increases its sales into the “high-margin” specialty pool and spa dealer channel, says Ian Zaffino, research analyst at Oppenheimer (New York). Chemtura is the number one player in water treatment chemicals, with market share of about 22%, Zaffino says.
Meanwhile, Rockwood says the sale is in line with its strategy of divesting noncore businesses. “Advantis is a good business, but it is a much better fit for Arch,” says Seifi Ghasemi, Rockwood chairman and CEO. Rockwood’s
other divestments in the last year include its electronic chemicals business to OM Group for about $265 million and the U. S. operations of its wafer reclaim business to Pure Wafer (Swansea, U.K.) for about $11 million.
The $29-billion global water treatment market has been consolidating in recent years as suppliers aim to reduce costs, enhance portfolios, and expand geographically, analysts say (CW, March 3, p. 21). —nancy seewald
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