Kemira tilts at number one slot in organic acids

- Last updated on GMT

Related tags: Acetic acid

Finnish chemicals company Kemira is planning to buy Verdugt BV of
the Netherlands in a move that will triple its sales of organic
acids at a stroke and make it the number one company in the sector.

Kemira will pay €148 million for Verdugt, which produces derivatives of formic, propionic, acetic and lactic acids used in the pharmaceutical and chemical industries as reactants and in the food and feed industries as antimicrobial agents.

The move fits in with Kemira​'s stated strategy of refocusing its product mix to include a higher proportion of value-added products. Last year, the company sold its fine chemicals unit, now called KemFine, to venture capital company 3i. It also sold off a process engineering division in 2004.

Once the two companies are integrated, Kemira's sales of organic acids and derivatives will rise to around €160 million, allowing it to pull past BASF in the rankings to become the world's top producer of organic acid derivatives, from its current position as the second biggest producer of formic acid and its derivatives. BASF has a formic acid production capacity of 180,000 tons a year.

Kemira is buying Verdugt​ from the international private equity firm CVC Capital Partners and the company's current management.

"The acquisition price is reasonable, considering Verdugt's profitability and the synergy benefits. We also expect the deal to raise Kemira's result as early as during our first year of operation,"​ said Harri Kerminen, president of Kemira's industrial chemicals business unit, which accounts for 24 per cent of Kemira's total sales and has revenues of over €400 million a year.

He added that the acquisition would allow Kemira to strengthen its position in Europe and acquire a leading position in formic acid in the US, while opening up new opportunities to expand in North and South America and Asia. The acquisition also widens Kemira's product range, and provides synergies in logistics, marketing and know-how.

Formic acid derivatives are used in the production of a number of products with pharmaceutical applications, including insulin, caffeine, vitamin A, enzymes, antibiotics and artificial sweeteners.

Verdugt's net sales total approximately €110 million. The company's main production plants are located in Tiel, the Netherlands, with a smaller unit in Barcelona, Spain. Kemira's formic acid plant is in Oulu, Finland.

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