Qemetica chemicals open to further acquisitions, wants to strengthen its market position

Qemetica has finalised the purchase of the precipitated silica business from PPG for PLN 1.2 billion (approximately USD 310 million). This is one of the largest transactions carried out by a Polish company in the US market.

Thus, Qemetica, the largest producer of, among other things, evaporated salt in Poland and the largest supplier of silicates in Europe, has acquired silica plants in the US and the Netherlands, thereby increasing revenues by more than one billion PLN.

At the same time, the Qemetica group becomes the third player in Europe and the second in North America in the market for precipitated silica necessary, among other things, in the production of modern car tyres.

During Wednesday's press conference, representatives of Qemetica and Kulczyk Investments assured that the group is open to further acquisitions.

"If we show that we can be a key player in the silica and soda market, why can't our ambition be that we are not the third player, but in a moment the second, and in the future in a few years the first," the head of Qemetica's supervisory board Sebastian Kulczyk said.

"We entered Ciech, or today's Qemetica, 10 years ago and these 10 years have shown that it is not only a very important asset for us, but also an asset where we want to be for many years to come. We see Qemetica as an entity that will be a vehicle for further growth," he added.

Kulczyk continued that this is just the beginning for Qemetica, and that today's transaction is an example of how the company wants to grow in every area and segment in which it is present.

"Growth can take place in a variety of ways: sometimes as organic growth, but sometimes also through acquisitions. We are not afraid even of a market as large and difficult due to its high competitiveness as the US market," he added.

Qemetica can draw funds for further acquisitions, among others, from a syndicated loan of PLN 3.4 billion (EUR 829.94 mln), for which the chemical company signed an agreement with 10 banks on Tuesday.

"The loan is a refinancing of all debt plus the acquisition tranche on PPG and we still have some spare funds for other potential acquisition activities," Qemetica’s CEO Kamil Majczak said.

Further growth of the group is also expected to be supported by the acquisition with of the R&D team along with the purchase of the precipitated silica business.

"The R&D team is an important element in building value in this business and looking at further expansion in the US or Asian markets," Majczak said.

The CEO is positive about the prospects for the precipitated silica market, especially in the US.

Kamil Majczak announced that the precipitated silica segment will become the second largest business for the Qemetica group.

"It will be our second largest business after the soda business. We have natural synergies as we produce silicates, which are the main raw material for silica production," the CEO said.

"With the acquisition, we are also acquiring two furnaces for silicate production. Today we have two furnaces in Poland. We are the largest producer in Europe. We see potential to grow this business in the US as well," he added.

From PPG, Qemetica is acquiring production plants in the US (in Lake Charles, Louisiana) and Europe (in the Dutch town of Delfzijl) with a total production capacity of nearly 200,000 tonnes.

In addition, as part of the acquisition, Qemetica gains access to a research and development centre in Monroeville, Pennsylvania, and a production line in Barberton, Ohio. The precipitated silica area has approximately 400 employees, who will join Qemetica's existing workforce of nearly 3,500 in Europe.

The acquisition is expected to allow Qemetica to accelerate its international expansion in North American countries and diversify its product portfolio, which already reaches nearly 100 countries worldwide.

Qemetica's new asset specialises in the production of precipitated silica - a key raw material for the global automotive, electrical engineering and materials industries (production of e.g. tyres, batteries, fillers).

Since 2014, Qemetica is in the portfolio of companies of Kulczyk Investments - an international private investment house.

To date, Qemetica has operated through seven business lines producing soda, evaporated salt, crop protection products, polyurethane foams, silicates and glass packaging, as well as providing rail transport services.

The precipitated silica business will be its eighth segment. In addition to the new business, Qemetica has nine production facilities in Poland and Germany and distribution companies in the plant protection products business in several European countries.

pr/ ao/ han/