Rianlon Corp., a Tianjin, China-based chemical company, will buy over 90% of the shares in Kangtai Lubricant Additives Co., a major Chinese lubricant additives supplier based in Jinzhou, Liaoning province.
The deal will cost Rianlon 596 million Chinese yuan (U.S. $90.9 million), with ¥179 million to be paid in cash and the rest in stock. An outsider to the lube industry, Rialon’s main business is making anti-aging additives for polymer materials. Its products include ultraviolet light absorbers, light stabilizers and antioxidants for plastics. The company has a subsidiary in the United States and claims to have high profile clients, including BASF, LG Chemical and Sinopec.
In a statement, Rialon made it clear that it expects the purchase to enrich its own product line and give the company quick access to the lube industry. It also expects the deal will bring together research and development in different types of additives from the two firms, as well as marketing resources in and outside China.
Rialon is building a 125,000 metric tons per year polymer materials manufacturing facility in Zhuhai, Guangdong province. Among the chemicals produced there are antioxidants that can be used in lube formulations. The facility is scheduled to start operation in late 2021, according to the company.
Kangtai is building a 50,000 t/y additives facility that is scheduled for completion in 2022. The acquisition came at the same time that Kangtai is preparing for an initial public offering at the Shenzhen Stock Exchange’s subsidiary ChiNext, which is equivalent to Nasdaq.
Kangtai’s revenue growth rate slowed down in recent years. The company earned ¥541.9 million in 2019, up 6% from 2018, when results were up 10.5% from 2017. Its revenue in the first half of 2020 dropped 23.8% year over year to ¥208 million because of the pandemic, according to the company.