Business Concentrates
Williams expanded the Geismar cracker by 40% in 2015.
CONSUMER PRODUCTS
Ashland will get Pharmachem for $660 million Ashland has agreed to acquire New Jersey-based Pharmachem Laboratories, a manufacturer of supplements and specialty ingredients for the wellness and personal care industries, for $660 million in cash. The deal will deepen Ashland’s move into consumer markets and shrink the industrial portion of its business. The company has been shifting focus since 2011, when it bought International Specialty Products (ISP). In 2014, Ashland sold its water technologies business. Ashland is also working to spin off Valvoline, its motor oil and oil change retail operation. The acquisition of ISP brought structural ingredients such as emulsifiers and polymers for the personal care, detergents, and food and beverage markets, along with pharmaceutical excipients. Pharmachem will add specialty active ingredients such as botanical extracts and vitamins. Pharmachem’s 2016 Pharmachem’s Phase 2 Carb revenues were approxiController, made from an mately $300 million. The extract of white kidney beans, company markets a numis purported to reduce the ber of branded supplecaloric impact of starchy food. ments, including Phase 2 Carb Controller, an extract from white kidney beans said to reduce the caloric impact of starchy foods. Other Pharmachem supplements claim to block glucose, lower cholesterol, and decrease wrinkles. In addition to branded products, Pharmachem supplies vitamins, minerals, amino acids, and botanical extracts to downstream supplement makers. The firm also extracts the fragrance ingredient sclareol from the clary sage plant and nicotine from tobacco. And it operates a custom processing and manufacturing business. According to Ashland, the purchase will boost earnings as early as this year and bring roughly $10 million in cost synergies. It will shift the proportion of Ashland’s sales to consumer pharmaceutical markets from 36% to 42%. In a note to clients, Longbow Research stock analyst Dmitry Silversteyn called the purchase of Pharmachem a solid strategic move, but he questioned the steep price Ashland agreed to pay. “Ashland management appears to have its work cut out to make the Pharmachem transaction value-creating,” he wrote.—MELODY BOMGARDNER
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C&EN | CEN.ACS.ORG | APRIL 24, 2017
PETROCHEMICALS
Nova to buy Williams’s ethylene plant Transaction is Canadian firm’s second recent U.S. Gulf Coast deal In its second big U.S. Gulf Coast deal in as many months, the Canadian petrochemical maker Nova Chemicals has agreed to buy Williams Partners’ Geismar, La., ethylene cracker and related assets for $2.1 billion. Nova will get Williams’s 88% interest in the Geismar cracker, which in 2015 was expanded by 40% to a capacity of 900,000 metric tons per year. Saudi Basic Industries Corp. owns the other 12%. Also included in the deal is Williams’s interest in an ethylene trading hub in Mont Belvieu, Texas, and more than 200 hectares of undeveloped adjacent land that Nova says “represents a significant opportunity for future growth.” Last month, Nova formed a partnership with its European sister company, Borealis, and the French firm Total to build a $1.7 billion ethylene cracker near Total’s refinery in Port Arthur, Texas, and a polyethylene plant in Bayport, Texas. Nova makes ethylene and polyethylene in Joffre, Alberta, and Sarnia, Ontario, but until now hadn’t succeeded in expanding its olefins business beyond Canada. Last year, the company started up a new polyethylene plant in Joffre. The company says it will decide later this year whether to build a new polyethylene plant in Sarnia. Steve Lewandowski, vice president of global olefins at the consulting firm IHS Markit, says he was surprised to hear that Nova was the winning bidder for the Williams cracker after announcing the Total joint venture weeks earlier. “But it appears they are willing to do both,” he points out. “They are going to be big on the U.S. Gulf Coast.” Lewandowski thinks Nova is paying a fair price for the assets. The Geismar plant, which supplies producers of polyethylene, vinyl chloride, and other ethylene derivatives, should be a moneymaker if the market for ethylene remains strong, as Lewandowski expects. Over the long term, Nova has the option of building a polyethylene plant on the site. In a research note, Moody’s analyst Joseph Princiotta said the acquisition will give Nova expanded capacity and geographic diversification while weighing it with more debt. “But the impact is more likely to be a net positive over time,” he wrote. Williams will continue to supply the Geismar facility with ethane feedstock after the transaction is completed. The company announced its intention to sell the cracker late last year to focus on its natural gas processing and distribution businesses.—ALEX TULLO
CREDIT: SHUTTERSTOCK (BEANS); WILLIAMS PARTNERS (PLANT)
Purchase brings specialty supplements and fragrances
