Clariant deal includes standard masterbatch concentrates

[freemexy]

Clariant AG's flurry of recent moves includes plans to sell off global pigments, standard masterbatch concentrates and medical specialties businesses that have annual sales of around $1.5 billion.plastic color masterbatch

Muttenz, Switzerland-based Clariant announced the move Sept. 18, the same day that it announced it was combining parts of its masterbatch and additives businesses with some plastic materials product lines owned by Saudi Basic Industries Corp.

Pigments, standard masterbatches and medical specialties "do not match the group's criteria to differentiate through innovation in higher growth and higher profitability areas," officials said in a news release.

They added that although these units will be divested, they're "well positioned" and have "significantly increased their profitability over the past years."

These businesses "will continue to be managed using differentiated business steering," officials said. Pigments and standard masterbatches are anticipated to grow in line with GDP, while medical specialties are expected to grow more quickly, in line with their underlying end market in health care packaging, they added.

The profitability of pigments and standard masterbatches "is expected to sizeably improve via stringent cost management," while medical specialties "will benefit from innovations resulting in profitable growth."

In emails to Plastics News, Clariant officials provided more details of what will be sold and what will remain with the firm. They confirmed that the high value segments of Clariant's masterbatches unit — segments that will be combined with the Sabic businesses — include color, high temperature resins and health care solutions for plastics.

Clariant runs masterbatches as a separate unit, but its results are included with plastics and coatings and not reported separately in the firm's financial documents. Plastics and coatings reported sales of about $2.6 billion in 2017.

With about $1.1 billion of that amount going into the Sabic unit, according to Clariant officials, the remaining $1.5 billion includes the pigments, standard masterbatches and medical specialties businesses that will be sold.

Regarding the medical specialties business, officials said that after carefully reviewing the businesses of both Clariant and Sabic, "it became clear that there would be not enough commercial synergies between Clariant medical specialties with Sabic's health care products. … Therefore, the decision was taken to not include it in the business combination."

The part of Clariant's medical materials business that will remain with Sabic includes Healthcare Polymer Solutions, which are FDA-compliant materials sold into drug delivery, diagnostics, invasive equipment and pharmaceutical packaging.