Italmatch Chemicals Group is set to acquire Afton Chemicals metalworking fluid business, strengthening the Italian companys position in the industrial lubricants market, the companies announced Friday. The deal is expected to close by May 30.
Financial terms of the agreement were not disclosed.
The deal encompasses all of the Richmond, Virginia-based companys metalworking fluids-related businesses and assets carried out in operations plants in Bedford Park, Illinois, and Manchester, United Kingdom; the companys technology and business sites in India and China; and capacity in Hyderabad and throughout China, according to the press release. The plants in India and China, however, will be retained by Afton to insure security of supply.
This transaction further strengthens Italmatch Chemicals Groups position in the industrial lubricants and metalworking fluids business, integrating the current production range with a series of fluid additives for high-performance metal processing thanks to the application of advanced technology, said Maurizio Turci, CFO of corporate Affairs and human resources director of Italmatch, in an interview.
Italmatch has not yet decided if there will be any changes to the Afton metalworking fluids brand, but emphasized that customers will gain access to a broader range of industrial lubricants through this deal. The integration process will be mainly based on employment continuity, Turci added.
The companies declined to comment on how the acquisition came about. One industry expert speculates the move may be an attempt to achieve a more profitable company, should the owners of Italmatch decide to sell.
Italmatch's owners are considering whether to put the business up for sale, so I assume that the acquisition from Afton is an attempt to achieve a bigger scale, and maybe profitability, R. David Whitby, chief executive for British consulting firm Pathmaster Marketing Ltd., told Lube Report. The sale also allows Afton to focus on its core automotive and industrial lubricants additives units, he added.
Whitby believes that when Afton acquired its metalworking fluid business from Polartech, it didnt fit well with the company, making this sale an unsurprising move. The metalworking fluids part of the lubricants business is fundamentally different to other segments of the automotive and industrial lubricants businesses, Whitby said.
He asserts that Aftons metalworking fluid unit meshes better with Italmatch, because the company is already an established metalworking fluid additive and other lubricant additives supplier.
This agreement strategically follows the recent acquisition of Elco Corp. in the USA, still in industrial lubricants business, allowing an important development of our current production range through the introduction of new and advanced technologies mainly dedicated to water[-based] metalworking fluids and permitting to count on new sites in the United States of America, in Europe and India, said Sergio Iorio, the CEO of Italmatch, in the press release.
This is Italmatchs second acquisition this year, and its fifth acquisition since 2017. Early last month, the company acquired Chinese antiscalant phosphonate component business Jiayou Chemical from Ecolab Inc., adding a plant specializing in phosphonates to its portfolio.
In December, Italmatch acquired Elco, a Cleveland, Ohio-based company that focuses on the production of high performance lubricant additives for industrial applications, and hydrochloric acid. Elco now acts as a U.S. subsidiary of Italmatch.
Using its Brazil subsidiary, Italmatch Do Brasil Partipacoes, the company acquired Brazilian distributor Sudamfos de Brasil in October 2017. The distributor specialized in phosphonates, phosphates and other specialty chemical products.
Finally, in an effort to expand its production range for the industrial water and process treatment markets, Italmatch acquired Magpie Polymers in July of last year. The French startup developed and patented selective filtration to recover precious metals.
Italmatch is a global specialty chemicals company focused on the production and marketing of industrial lubricants, performance additives for water and process treatment, oil and gas, and plastics. Afton Chemical is a global lubricant and fuel additives company.