Quaker Chemical and Houghton International stated Tuesday that they expect the United States Federal Trade Commission to approve their proposed merger and for the deal to close within the next few months.
Quaker Chemical announced in April 2017 an agreement to acquire Houghton International, a deal combining two of the world’s largest suppliers of metalworking fluids. Houghton is owned by Indian conglomerate Hinduja Group through its lubricant business Gulf Oil. The deal calls for Hinduja to take a nearly 25 percent stake in the combined company and to be given three seats on its board of directors. The transaction requires approval from Quaker’s shareholders as well as approval from governing bodies in several regions.
Last July Quaker announced it was in discussion with the European Commission and FTC regarding its combination with Houghton. Based on those discussions, Quaker expected the remedy would involve a divestment of product lines that, in total, account for approximately 3 percent or less of the revenues of the combined company.
Conshohocken, Pennsylvania-based Quaker said it remains in productive discussions with the FTC but that the process is taking longer than anticipated. Given the time lapse since Quaker’s initial filing, the FTC has requested updated information as part of their approval process, Quaker stated in yesterdays news release.
In addition, the government shutdown in the U.S. increases the uncertainty of the timeline to receive final approval. The proposed remedy being discussed with the FTC continues to be consistent with Quaker’s previous guidance that the total divested product lines will be approximately 3 percent of the companies’ revenue.
On Dec. 11 the European Commission conditionally approved the merger, including the divestment proposed by Quaker and Houghton. Quaker expects final approval from the commission once the final purchase agreement is in place and agreed upon by Quaker, Houghton and the buyer of the divested product lines.
Quaker Chemical’s sales are dominated by metalworking fluids used in the production of primary metals, and Houghton mainly supplies metal removal fluids used in processes such as drilling, grinding and cutting. The combined company is expected to derive 55 percent of its revenue from sales of metal removal fluids, 38 percent from products used in production of primary metals and 7 percent from other products.