Agreement includes products, technology, and manufacturing assets in Brazil, India and South Africa.
In separate press releases ASK Chemicals and SI Group have announced that they have agreed on the purchase of SI Group’s industrial resin business and associated manufacturing sites in Brazil, India and South Africa, as well as licensed technology and multiple tolling agreements globally by ASK Chemicals. The transaction is expected to close later this year.
SI Group will carve out the rubber and adhesives business, oilfields and surfactants, as well as foundry products in Brazil, and will operate tolling agreements with ASK Chemicals.
SI Group’s industrial resin business serves a wide range of markets and applications such as foundry, friction, abrasives, refractory, paper impregnation, insulation and composites.
With this acquisition, ASK Chemicals is reinforcing its position in the foundry market and at the same time strengthening its non-foundry business, the company said.
The agreement is for the SI Group to sell the majority of its global Industrial Resins business to ASK Chemicals, a portfolio company of private equity firm, Rhône Group. Rhône Group is a global private equity firm, specialising in mergers and acquisitions, leveraged buyouts, recapitalisations and partnerships with particular focus on European and Trans-Atlantic investments. Other companies included in the company’s portfolio are Illy (coffee industry), Zodiac Fluidra (pool equipment) Hudson’s Bay Company (department stores) and Rexair (vacuum cleaning systems) amongst others.
The transaction includes SI Group’s industrial resins products and associated manufacturing sites in Rio Claro in Brazil, Ranjangaon in India and Johannesburg in South Africa as well as licensed technology and multiple tolling agreements globally. ASK Chemicals, headquartered in Hilden, Germany is a market leader in the foundry materials sector and manufactures binders, coatings, feeders, filters, and release agents, as well as metallurgical products including inoculants, inoculation wires and master alloys for iron casting.
“We remain confident that this is the right strategic move for our employees and our business. ASK Chemicals has proven industry expertise that will add significant value and continuously enhance these businesses. The deal also allows us to focus more intentionally on building and growing our portfolio as a performance additives powerhouse,” said David Bradley, President and CEO of SI Group.
SI Group will carve out related businesses at these sites, including the manufacture of rubber and adhesives, oilfield, and surfactants, as well as foundry products in Brazil, and will operate tolling agreements with ASK. The company will also retain the Industrial Resins businesses in the US and China.
ASK Chemicals in South Africa
ASK Chemicals has had a long relationship with the South African foundry industry. Various manufacturing companies have had license agreements to manufacture their products locally. These include Applied Chemicals, AECI/Chemserve with the latest being Chemsystems, a division within AECI.
Through various mergers, acquisitions and joint ventures the names of Ashland, Südchemie, Kernfest, Clariant and Ashland-Südchemie-Kernfest GmbH have all been associated in South Africa.
ASK Chemicals is represented in 25 countries with 30 sites, 20 of which operate their own production, and employs approximately 1 800 people worldwide. With research and development in Europe, America and Asia, ASK Chemicals sees itself as the driving force behind industry-specific innovations and is committed to offering customers a consistently high level of quality. Flexibility, quickness, quality and sustainability as well as cost-effective products and services are of key importance.
July 2019 announcement
In July 2019 a similar announcement was made by ASK Chemicals and the SI Group. In November 2019 the South African Competition Commission conditionally approved the proposed merger. The Commission found that the proposed transaction was unlikely to result in a substantial prevention or lessening of competition in any relevant markets. Nonetheless, in order to aid Chemsystems in the interim while it negotiates with any other IP supplier, the Commission imposed conditions to the approval of the merger requiring ASK to extend the current IP license agreement with Chemsystems for a period of a year. The Commission further found that the proposed transaction raises public interest concerns. The Commission imposed a condition that the merging parties shall not undertake any forced or involuntary retrenchments as a result of the merger for a period of five years.
April 2020: SI Group announces termination of agreement
In April 2020 the SI Group announced the termination of the agreement. COVID-19 was cited as one of the reasons but the biggest stumbling block was that the Brazilian authorities did not give the go-ahead. There has been no reason given as to why the Brazilian authorities have now agreed to the acquisition by ASK Chemicals.
SI Group South Africa is a crucial foundry partner
In 2004 Schenectady International, Inc. (now known as the SI Group), through its South African affiliate, Schenectady South Africa (Pty) Ltd reached an agreement to partner in South Africa with Hüttenes-Albertus Chemische Werke GmbH (HA) by acquiring Hüttenes Albertus Falchem (Pty) Ltd and Zeta Resins (Pty) Ltd’s foundry and timber chemical intermediates business.
In 2010, in order to streamline operations in South Africa and make the group more cost effective, it was decided to flatten this structure and incorporate HA Falchem SA (Pty) Ltd into the SI Group, and SI Group South Africa (Pty) Ltd was formed.
With this latest announcement it again leaves HA without a local manufacturing partner.
