Croda PLC (LON:CRDA) has launched a £600mln placing and retail offer to help fund the £736mln acquisition of Spanish fragrances and flavours firm Iberchem.
Founded in 1985, Iberchem has 850 employees, 14 manufacturing facilities, ten research and development centres and a commercial presence in 120 countries.
Around 80% of its sales are fragrances for Personal Care and Home Care products, areas where it has a similar customer profile to Croda, while a further 20% of sales are generated by its Scentium flavours business, principally for food, pharmaceutical and oral care applications.
The FTSE 100 chemicals company said the acquisition will drive its strategic objectives by focusing on faster-growing core consumer markets, adding a new, high-growth adjacency to its existing businesses, where it can gain significant exposure to emerging markets.
The global fragrance market is expected to reach an estimated US$58.8bn by 2024 with an annual growth 5.6% over the next four years, due to supportive market fundamentals, including a growing global middle class and increasing demand for beauty, health and hygiene products, especially in emerging markets.
Croda said its formulation capability will complement Iberchem’s expertise, developing new ways of meeting customer needs, with synergies estimated to be at least €25mln revenue annually by year three and €48mln by year five after completion.
The group has raised £627mln by placing 10.6mln shares to institutional and retail investors today at a 3% discount to Tuesday’s closing price.
The new shares represent 8.2% of the existing issued ordinary share capital of the company.
Croda also announced that trading in the half-year to the end of October was in line with expectations and the overall outlook for the full year unchanged.
Core business sales rose 1% compared to last year, excluding the impact of acquisitions, with a steady month-on-month recovery in both consumer and industrial markets.
Personal Care and Performance Technologies sales shed 5%, while Life Sciences jumped 18%.
Shares rose 2% to 6,204p on Wednesday morning and closed at 6,084p.
–Adds placing result, shares–