TAGS: Industrial Coatings Environmentally Friendly Coatings Powder Coatings
Covestro has signed an agreement to acquire the Resins & Functional Materials business (RFM) from Royal DSM. By expanding its portfolio in the attractive growth market for sustainable coating resins, Covestro is taking a significant step in its long-term corporate strategy to strengthen its sustainable and innovation-driven businesses.
Accelerate Transition to Circular Economy
This acquisition is an important step for Covestro’s corporate strategy. RFM enhances the growth trajectory of its business. By combining strong innovation capabilities, sustainable product portfolios as well as complementary technologies and customer industries, Covestro will unlock significant value.
The integration of RFM will create a business of enhanced scale and technological capability, benefitting existing and future customers as well as its employees through a stronger growth platform.
With the acquisition of RFM, the company will add a complete range of water-based polyacrylate resins and will expand its technology portfolio to include water-based hybrid technologies,
powder coating resins as well as radiation curing resins. RFM includes strong brands in terms of sustainability such as Niaga®, as well as additive manufacturing, and an advanced solar coatings business.
Acquisition Strengthens Covestro’s Positioning in High-growth Markets
The acquisition diversifies Covestro’s industry exposure and also significantly strengthens the company’s positioning in attractive high-growth markets. Amongst others, Covestro will become one of the leading suppliers in the field of optical fiber coatings – a market segment with enormous future potential, including the future technology of 5G – and in the attractive high-growth segment of 3D-printing materials, showing an average growth rate of more than 20%.
Both businesses are committed to ambitious ESG (Environment, Social, Governance) goals and have an excellent and complementary research pipeline, especially in the area of sustainable high-performance raw materials for the coatings industry. Combining them will allow Covestro to be even more innovative in the field of coating resins and become an even more attractive R&D partner for its customers. Thereby, Covestro will be able to drive innovation and to advance sustainability across the integrated customer industries as well as to pursue the transition to a circular economy even faster.
Significant Potential for Value Creation
Integrating RFM into the CAS segment of Covestro creates significant opportunities to unlock incremental value. The company expects permanent (“run-rate”) synergy effects to build-up to about EUR 120 million per annum from full integration by 2025. These consist of approximately two-thirds of cost and one-third of revenue synergies and are generated amongst others through the alignment of purchasing, sales and administrative structures in the integrated business as well as cross-selling and the joint development of new high-performance products.
“The acquisition is strategically and financially a perfect opportunity for us to pursue our long-term growth strategy at highly attractive conditions and tangible synergies. With the chosen financing structure, we are striking the right balance between equity and debt,” says Dr. Thomas Toepfer, Covestro CFO and labor director. “
We look forward to welcoming our new colleagues under the Covestro roof soon. Together, we will work towards bringing our joint potential to life.”
Closing of the transaction is expected for the first quarter of 2021 and is subject to regulatory approvals, including antitrust clearance.
Source: Covestro