Lonza Buys Biocides-maker Arch


Lonza will acquire 100 percent of Arch Chemicals shares for $47.20 per share in a transaction valued at $1.4 billion.

Both Basel, Switzerland-based Lonza and Arch Chemical of Norwalk, Conn., make biocides, which are used to control the growth of microorganisms in paints, architectural coatings and metalworking fluids.

In terms of the two companies respective biocides businesses, our portfolios are complementary and not competitive, Lonza spokeswoman Melanie Disa told Lube Report. We do not compete in the same markets.

According to Lonza, the global microbial control market is currently valued at $10 billion, growing at 4 to 6 percent per year. The key end-use segments of the market – water treatment, hygiene, materials protection and personal care – are growing at faster rates. The company said the largest microbial control markets are North America, Europe and Japan, while the fastest growing such markets are Brazil, India, China and South Africa.

According to Lonza, the acquisition will strengthen its position in the high-growth economies of China, India, Brazil and South Africa. In these countries, increasing regulation is expected to lead to greater use of already approved active ingredients and formulations, a trend that is expected to result in further industry consolidation, Lonza stated on Monday.

The acquisition of Arch Chemicals will add to Lonzas footprint mainly in North and Latin America, while Lonza brings a stronger foothold in China, Europe and India, Disa said.

Disa noted that part of Lonzas strategy is to move down the value chain to get closer to the end consumer. For example, we have already started to sell directly to end-consumers, mainly in China, she noted. Arch Chemicals knowledge and experience in end-consumer markets will provide us with critical in-house knowledge that will immediately help us to accelerate this element of our strategy.

As of 2010, Lonza had more than 8,200 employees. Arch currently employs about 3,000 people in 23 primary manufacturing and research facilities worldwide.

In September 2010, Arch said in a Securities Exchange Commission filing it would consolidate its U.S. research and development and technical service activities in Alpharetta, Ga., to improve operating margins. Disa said that while Lonza cant comment on those previously announced plans, after the deal closes, our current plan is to retain nearly all of Arch Chemicals sites, given our growth ambitions for our new, enlarged microbial control business.

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