Elco Corp. parent Detrex and global specialty chemicals company Italmatch Chemicals have entered into a merger agreement, the companies jointly announced early last week. Italmatch will pay $27 per Detrex share, or nearly $45.9 million cash, to create a new subsidiary. The deal is expected to close by Dec. 31.
Cleveland, Ohio-based Elco, Detrexs operating subsidiary, manufactures high performance specialty chemicals. Elcos primary business areas include additives such as antioxidants, extreme pressure agents and rust and corrosion inhibitors for industrial lubricants, greases, metalworking and other fluids. It also makes high purity hydrochloric acid for the semiconductor industry.
Although the merger agreement has been approved by the companies boards of directors, it is still contingent on the approval of Detrex shareholders, who are meeting Dec. 7 to discuss the deal. In addition to a two-thirds shareholder approval, the proposed merger must also meet the requirements of customary closing conditions, such as obtaining all government regulatory approvals.
Italmatch, which is controlled by private investment company Ardian France S.A., is a global specialty additives company with 340 million (U.S. $399.21 million) in sales. The Genoa, Italy-based company offers specialized performance additives for lubricants, oil and gas, water treatment and plastics. Its best known lube brand is Ketjenlube polymeric esters, and it also makes oleoesters, friction modifiers and succinic and phosphorus derivatives as well as phosphate esters.
Italmatch is the main European manufacturer of phosphorus pentasulfide, a key raw material for producing ZDDP antiwear and antioxidant additives – which Elco makes. The Italian company has six manufacturing plants in Europe, four in the Asia-Pacific region and two in the United States, with sales and distribution centers in Belgium, China and Japan.
From a product portfolio point of view, Italmatch is a leader in specialty synthetic base stock and antiwear additives, and Elco has a distinctive position in EP additives and ad-pack for grease and metalworking fluids, commented Sergio Iorio, managing director of Italmatch.
The two companies have discussed the possibility of merging for quite some time, according to Doug Church, president of Elco. He was unable to say when discussions began, but did note the companies have worked together in the past.
Although the companies have yet to discuss the business organizational structure for the new company, customers should not expect any major changes, said Church. We will retain our resources and our people and customers can expect to see an expanded product line as the two business units combine, he explained.
We see a number of opportunities for growth going forward. Both companies look at this integration as a way to service the market, Church told Lube Report. Its one of those mergers that is good for both companies.