CLARIANT ON ACQUISITION SPREE WHILE HOECHST MERGER COOKS

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CHICAGO—Clariant Ltd. has been acquiring compounding companies while it waits for European Trade Commission approval for a major deal with Hoechst AG. Clariant officials would not disclose what companies they acquired in a June 15 interview at ReedSpectrum's NPE exhibit (Booth N4328). Hans Muhlebach, chief operating officer of Clariant's Masterbatches Division, said the Muttenz, Switzerland, firm will reveal details after July 1, when it expects to finalize its merger with Hoechst's Specialty Chemicals Division.

The two firms announced the impending merger in December but due diligence and regulatory approvals have slowed completion of the deal.

Although Muhlebach and other officials would not disclose recent acquisitions in North America and elsewhere, they did reveal the firm is expanding internally through new plants.

Its ReedSpectrum unit opened a plant in Naucalpan, Mexico, in April. Clariant also started up a facility in Shanghai, China, in spring. Another new plant, dedicated to carbon black-loaded products, is due to start up in Kentucky in September. It also relocated a plant from Asia to Dalton, Ga., accomplishing the feat in three months, to capitalize on new fiber materials technologies.

ReedSpectrum, based in Holden, Mass., makes custom engineered color and additive concentrates.

Muhlebach said the new Clariant resulting from the merger probably will not close any compounding or masterbatch facilities because it will want plants to remain close to customers.

Clariant's Masterbatches Division has 28 production plants around the world, concentrates producer ReedSpectrum has six plants in North America, and the Bay Resins compounding business operates a plant in Millington, Md.

ReedSpectrum's Mexican plant will focus on regional markets and complements its Phoenix facility. The Naucalpan operation has two twin-screw production lines in a 10,000-square-foot building. It produces custom masterbatches mainly for packaging and engineered products.

Muhlebach said Clariant's various compounding businesses will keep their corporate names after the merger ``because they have a lot of goodwill.'' Hoechst will own 45 percent of the new Clariant, although its representation on Clariant's board will be lower than that. He said each firm brings strong technical skills to the merger and the new Clariant will identify and capitalize on them.

He said the new Clariant will have strong engineering resources at its core that it can share with individual operations around the world. For example, it builds its own extrusion lines using parts sourced from various suppliers. Robert Storey, vice president and general manager of Bay Resins, said Clariant designs its extrusion lines to be flexible.

``We will have local production with leverage for global competition,'' said Michael Smith, ReedSpectrum's vice president and general manager. The operations will continue emphasizing specialty materials, especially where colors are required.

Officials stressed Clariant's color matching capabilities as key to its growth in compounds and masterbatches. Its ReedSpectrum unit relies on GretagMacbeth's Color-Eye 7000 spectrophotometer for color matching. GretagMacbeth modified the Color-Eye 7000 to mesh with ReedSpectrum's computer software.

ReedSpectrum spent six years developing its CoMES color matching system, which allows it and affiliated companies around the world to share formulations for exact matches. This means a customer can mold parts in various locations and ship them to one location for assembly, confident they will match. Clariant companies do more than 60,000 color matches a year, Muhlebach estimated. They can color match in minutes what used to take hours or days.

Muhlebach said the new Clariant will operate as a lean company. Officials previously estimated its total sales of masterbatches, additives, pigments and other specialty chemicals will have annual sales exceeding $6 billion. It will be a public company traded on the Zurich, Switzerland, stock exchange. Clariant's stock price has doubled since late last year, when Clariant and Hoechst revealed their plan to merge in specialty chemicals.

Gunther Hencken, president of Clariant's Masterbatches Division, said the new company will combine more than 250 years of colorants experience.