Advent’s $3.3 Billion Roehm Deal Looks to Rekindle Chemical Icon

(Bloomberg) -- Advent International is following up its $3.3 billion acquisition of Evonik Industries AG’s plastics division with a plan to broaden the unit’s customer base to make it less dependent on carmakers.

Advent aims to build a factory using a new technology for the unit, which was rebranded as Roehm to highlight its links with a historic German chemicals company. Automakers, which account for as much as a quarter of Roehm’s sales, have been at the center of trade tensions between the U.S., China and the European Union, which has had a knock-on effect on the chemicals industry.

“We see the auto industry as having reached the bottom, with some signs of recovery expected toward the second half,” Roehm Chief Executive Officer Michael Pack said in an interview. Roehm is seeing increased demand from companies in the mining, medical, and aircraft industries, helping it to diversify.

The buyout of Roehm, which closed in July, was the biggest purchase of a chemical company by a private-equity investor in the past year. Like Japan’s Mitsubishi Chemical Holdings Corp., Roehm’s so-called Lima technology uses ethylene as a raw material, avoiding the high costs of the traditional method which, by using cyanide, requires more waste treatment.

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The new plant will enable Roehm to use an alternative process to make the rigid, transparent polymer used in everything from car lights to kitchen appliances. Advent will seek partners to invest in the factory and supply it with raw materials, according to Ron Ayles, its head of chemicals.

“We are in the early stages, yet we find a strong interest to partner with us,” Ayles said. The company is evaluating locations including America’s Gulf Coast for the plant.

Roehm’s origins date back to 1907 and the creation of Roehm & Haas, a historic chemical company which, like Imperial Chemical Industries and Degussa AG, eventually lost its individual identity after being acquired by a larger competitor.

Plexiglas was a breakthrough product for the company as the emerging car industry started using the transparent safety glass. After a series of transactions, the methacrylates business became part of Evonik, while the bulk of Roehm & Haas was acquired by Dow Chemical.

Roehm plans 100 million euros ($110 million) in cost savings over the next three years, double the amount initially planned. They will be driven by improvements in procurement costs, administrative expenses and other efficiencies, Pack said.

To contact the reporters on this story: Andrew Noël in London at anoel@bloomberg.net;Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Andrew Blackman

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