Kraton Performance Polymers Inc. plans to acquire tall oil products maker Arizona Chemical Holdings Corp. for $1.4 billion.
The markets and customers that the two companies have in common include lubricants and oilfield chemicals. According to Kratons acquisition presentation, its own products include viscosity modifiers for oils and lubricants, as well as viscosity modifiers in oil-based oilfield fluids. Arizona Chemicals products includes tall oil fatty acids used in metalworking fluids, corrosion inhibitors, emulsifiers and thickening agents.
This transformational acquisition will extend Kratons technology and market diversification…, Kraton President and CEO Kevin M. Fogarty said in a news release Monday.
Houston-based Kraton indicated that Arizona Chemicals end-use market exposure is complementary with its own, particularly in markets such as oilfield chemicals, adhesives, coatings, and construction. Fogarty said the acquisition is expected to expand Kratons presence in its core markets, where more than 50 percent of Arizona Chemicals sales are directed. In addition, given the renewable nature of Arizona Chemicals product and technology offerings, the complementary growth we foresee can be accomplished while reducing our overall exposure to hydrocarbon-based feed stocks, he added.
Kraton posted a $15.8 million loss net loss for the quarter ending June 30, whereas Arizona Chemical reported $93 million in net income for the period.
Under the agreement, Kraton will acquire all the capital stock of privately held Arizona Chemical. The seller is AZC Holding Co. LLC, which is principally owned by investment funds managed by American Securities LLC.
Kraton is one of the worlds largest producers of styrenic block copolymers, which are used in a wide range of applications, including lubricants. The company manufactures products at five plants in Belpre, Ohio, Germany, France, Brazil and Japan. The plant in Japan is operated by an unconsolidated manufacturing joint venture.
Arizona Chemical makes a variety of tall oil products, including tall oil fatty acids, soaps, rosins and distilled tall oils. Based in Jacksonville, Fla., and Almere, Netherlands, the company operates nine manufacturing facilities in North America and Europe. It also operates three science and technology centers in Almere, Netherlands; Savannah, Ga., in the United States; and Shanghai.