DUESSELDORF, Germany (Reuters) - Germany’s Evonik agreed to buy J.M. Huber Corp.’s [CPKEL.UL] silica unit for $630 million to widen its specialty chemicals business, the company said on Friday.
Evonik’s own silica products are mainly used to improve the wet grip of tires. The deal with U.S. based Huber will widen its customer base to include makers of toothpaste, animal feed and paints, and give it better access to Asia, especially India.
“Huber’s business is especially oriented towards applications in the consumer goods industry, the dental sector for example. To date, Evonik’s silica business has been focused rather on industrial applications, for example in the tire and coatings industries,” Evonik said in a statement.
The acquisition from family-owned Huber is expected to close in the second half of next year and follows an acquisition by Evonik in May to buy an additives businesses from U.S. group Air Products and Chemicals for $3.8 billion.
Evonik, controlled by a public-sector trust, has been seeking to cut its dependence on volatile animal feed ingredients and had been under pressure to return cash to shareholders if it could not secure deals.
Evonik shares rose 0.7 percent to 28.05 euros at 1543 GMT on Friday.
Evonik plans to finance its latest purchase from existing reserves and credit lines. The Huber unit has about $60 million in earnings before interest, taxes, depreciation and amortization (EBITDA) on expected 2016 sales of close to $300 million.
Cost efficiency and sales benefits from folding the Huber unit into Evonik will add about $20 million to core earnings per year.
Evonik’s competitors in silica include Belgium’s Solvay, PPG Industries of the U.S. and Taiwan’s OSC Group.
J.M. Huber, headquartered in Edison, New Jersey, said it would invest the proceeds in its engineered materials businesses.
Writing by Ludwig Burger; Editing by Alexander Smith and Elaine Hardcastle