Ingevity Corp. has completed its purchase of the Capa caprolactone division of Perstorp Holding AB, adding a plant in England and a new family of products to the North Charleston company.
Ingevity paid €578.9 million, or $652.5 million, in cash, the company said Wednesday. When it announced the agreement on Dec. 10, Ingevity valued the deal at about €590 million, or about $675 million, and said it would pay with cash and its existing bank credit facility. It had expected to close late in the first quarter.
“The Capa division is a strong, market-leading business focused on high-growth end-use applications and is an excellent fit with Ingevity’s business model and capabilities,” said Michael Wilson, Ingevity’s president and CEO. “We are very pleased to be adding such a unique business to our company; one that will provide new avenues for strategic growth.”
What Capa makes
Capa is the global market leader in making and selling caprolactone and higher-value products made from it, according to Ingevity. Those include caprolactone polyols, caprolactone thermoplastics, caprolactone lactides and hexanediol. They go into adhesives, bioplastics, coatings, elastomers and resins.
The business runs a manufacturing plant in Warrington, England, and has about 100 employees, Ingevity said.
In December, Ingevity said Capa expected 2018 revenue of about €150 million, or about $175 million, and adjusted earnings before interest, taxes, depreciation and amortization of about €50 million, or about $60 million. That works out to adjusted EBITDA margins in the mid-30s percent range, the company said.
Ingevity will report the business within its Performance Chemicals segment, with revenue listed as “Engineered Polymers.” The company expects the acquisition to add to its earnings and margins in the first year.
When the deal was announced, Wilson said Capa “leverages technology-focused relationships to drive customer intimacy and employs a similar manufacturing process and approach” to Ingevity’s existing businesses.
“The senior managers and employees of the Capa division are looking forward to joining Ingevity,” Stephen Lewis, Perstorp’s vice president for caprolactones, said in December. “We believe Ingevity is a great cultural fit for our people and the combination of these two companies will accelerate our success.”
A second deal in less than a year
Capa is Ingevity’s second acquisition since March. On March 8, 2018, the company completed its $310 million purchase of Georgia-Pacific’s pine chemicals business. That deal included the pine chemicals assets at Georgia-Pacific’s plant in Crossett, Ark., and a 20-year crude tall oil supply contract with some of Georgia-Pacific’s paper mills.
Ingevity was spun off from WestRock Co. in May 2016. It makes specialty chemicals and activated carbon used in asphalt paving, oil exploration and production, agrochemicals, adhesives, lubricants, publication inks and automotive parts that reduce gasoline vapor emissions. It operates from 25 locations around the world and employs about 1,700 people, the company said.
Results and outlook
Ingevity also reported preliminary 2018 results Wednesday. Net sales rose 16.6% to $1.13 billion from $972.4 million in 2017, and net income rose 25.2% to $181.8 million from $145.2 million. Fourth-quarter sales rose 21.4% to $278.6 million.
“We delivered an outstanding quarter that exceeded our expectations and capped off another very strong year for Ingevity,” Wilson said in the earnings release.
The company’s 2019 outlook, which includes Capa, calls for sales of $1.30 billion to $1.36 billion and adjusted EBITDA of $390 million to $410 million.
Closer to home, Ingevity broke ground last summer on a new global headquarters in North Charleston. Photos posted by the City of North Charleston show participants in hard hats turning dirt at the site on July 31, 2018.
“Moreover, we’re excited to welcome our new employees in Warrington and across the globe,” Wilson said Wednesday.
