Ingredient maker J.M. Huber sells off silica business

15-Dec-2016 - Last updated on 15-Dec-2016 at 21:42 GMT

In a deal announced this week, specialty chemical company Evonik has acquired the J.M. Huber silica business for more than $600m. It’s a transaction that will up the company’s position as a supplier of silica for many industries, not the least of which is cosmetics.

With the business, Evonik stands to gain larger market share in both the US and Asia as well as the strategic abilities to grow the company’s silica portfolio, according to a press release about the acquisition.

Business decision

J.M. Huber wasn’t necessarily looking to sell: “The silica business has been part of Huber since the 1950s and paved the way for our company’s global expansion into engineered materials,” Mike Marberry, president and CEO of Huber, points out in the release. “While it is difficult to part with a longstanding business, we see Evonik as an excellent strategic fit for both our silica customers and employees,” he says.

The Huber Corporation has been operating in the US since 1883. Close to 700 people are employed at Huber Silica alone, with nearly 4,000 employees working for the full company in countries around the globe.

Facts and figures

Evonik paid $630m for Huber Silica, a business that’s expected to report annual sales for 2016 of nearly $300m.

And, as the companies have overlapping capabilities, facilities, etc. between them “Evonik expects to generate synergies of 20 million US dollars, largely in the areas of production, logistics and procurement as well as through harmonization of the product portfolio,” as the Evonik press release notes. The company expects that these steps to streamline the new business will take place over the next five years.

Material gains

Silica is, of course, simply silicon dioxide and has applications in a full spectrum of industries. Evonik does a preponderance of its business with tire manufacturers and paints and coatings makers. “Evonik’s silica products are also being applied as flow additives and carriers for the manufacture of foodstuffs, cosmetics, pharmaceuticals and silicones,” as the press release states.

And Evonik sees silica as a sustainable material, in line with today’s consumer and business trends: “The manufacturing process is independent from oil-based raw materials and therefore well-suited to Evonik’s sustainable business strategy.”

Pending conventional approvals, the deal will be finalized in the second half of next year.