Israel Chemicals Ltd. (TASE: CHIM) is expanding its international activities. It announced today the signing of a contract for the acquisition of US chemicals company Astaris LLC for $255 million in cash.
Israel Chemicals said it plans to integrate Astaris’s activities into the framework of ICL Performance Products, as part of its expansion of the range of higher value-added downstream products produced and sold by ICL. The consolidated activities are expected to grow to $1 billion a year.
Deutsche Bank (NYSE: DB; LSE: DBK; XETRA, AEX, SWX, ATX: DBKG) is accompanying the deal. Israel Chemicals said it would finance the acquisition of Astaris from its own resources and its existing credit line. Israel Chemicals does not expect a need to make additional substantial investments as a result of the acquisition. Israel Chemicals has NIS 635 million in cash, according to its financial report for the second quarter of 2005. Its market cap is NIS 21.2 billion.
The transaction is subject to a number of conditions precedent, the most significant of which are the approval of the US antitrust authorities and approval of a court overseeing the reorganization under Chapter 11 of Solutia Inc. (OTCBB:SOLUQ), one of the owners of Astaris. Astaris’s shareholders have approved the deal.
Astaris is a leading manufacturer and marketer in North and South America of phosphate salts, phosphoric acid (food and technical grades) and phosphorus-based chemicals for industrial use. Astaris was founded in 2000 by Solutia (a spin-off of Monsanto (NYSE: MON)) and FMC Corporation (NYSE:FMC)
Based in St. Louis, Missouri, Astaris has five factories in the US: in New Jersey, Illinois, Missouri, Kansas, and California. It has 570 employees. The spread of the company’s factories across the US gives it good access to various customers, without the need for long-distance transport or shipping. Astaris posted $350 million in net sales in 2004, and posted an operating profit of $10.7 million on $180 million in sales in the first half of 2005.
Astaris’s phosphates products are used in wide range of industries and products, including cleaning materials and detergents for industrial and institutional use, baking ingredientss, beverages, meat, cheeses, dental care products, oil additives, metal coatings, fire fighting products, and flat screens.
In addition to its operations in the US, Astaris also has two factories in Brazil: one for the production of phosphoric acid, in partnership with a local company; and another for the production of phosphate salts used in food and detergents.
The Brazilian market for these products has great growth potential, especially given the rapid development of the food and cleaning materials industries. Astaris’s two factories are considered industry leaders in Brazil, and will become part of Israel Chemicals’ activities in South America. Israel Chemicals recently announced the acquisition of Brazilian company Adicon.
Published by Globes [online], Israel business news - www.globes.co.il - on September 1, 2005