In a move to diversify, NewMarket Corp., the parent company of lubricant additive supplier Afton Chemical, agreed to buy American Pacific Corp., a producer of oxidizing chemicals used for space and defense applications.
NewMarket, which is headquartered in Richmond, Virginia, said it will pay $700 million to acquire American Pacific’s parent, Ampac Intermediate Holdings LLC. The deal is subject to review by competition authorities, but NewMarket predicted it will close in the first quarter of next year.
“With consistent cash generation, sustainable competitive advantages in vital markets, and an experienced management team, it is a terrific fit with our acquisition and diversification criteria,” NewMarket Chairman and CEO Thomas E. Gottwald said in a Dec. 4 news release. “We view AMPAC as a strategic, national asset with a mission-critical role in global safety, security and space programs ….”
Afton is one of the globe’s four main suppliers of lubricant additive packages, the others being Lubrizol Corp., Infineum and Chevron Oronite. These companies do much of the work to develop formulas that meet finished lubricant performance requirements and then sell chemical additives that are blended with base stocks to make those products.
American Pacific, which is based in Cedar City, Utah, does no business in the lubricants industry. Its main products are perchlorates such as ammonium perchlorate, an oxidizer used in solid rocket propellants. The company has been supplied space launch and national defense programs for more than 60 years.
The company also supplies halocarbon-based chemicals used to replace fire extinguishing materials that deplete the earth’s ozone layer.