Sustainability-focused chemicals company Clariant is set to acquire Canadian ingredients company Lucas Meyer Cosmetics from International Flavors & Fragrances (IFF) for a total consideration of $810m (€767m/CHF 720m).
The deal is subject to regulatory approvals and customary closing conditions and is expected to finalise in Q1 2024.
Clariant said that the proposed transaction will help expand its reach into high-value cosmetic ingredients space and “transform its portfolio towards high-growth, high-margin and highly cash-generative specialty chemicals businesses and consumer end-markets underpinned by accelerating demand for natural and sustainable products.”
The move will increase Clariant’s exposure to the active and functional cosmetic ingredients market and strengthen its North America presence in the Care Chemicals business unit.
Clariant CEO’s Conrad Keijzer said: “The proposed acquisition of Lucas Meyer Cosmetics marks another major step forward for Clariant’s purpose-led growth strategy. It will strengthen our position as a true specialty chemical company, our exposure towards consumer markets, and our footprint in North America, while supporting our goal to accelerate customer- and sustainability-driven innovation. In addition, Lucas Meyer Cosmetics brings a highly experienced leadership team with an excellent track record.”
He continued: “By combining our personal care ingredients portfolio with Lucas Meyer Cosmetics, Clariant will become a leader in the high value cosmetic ingredients space, one of the most attractive, profitable, and fastest-growing specialty chemicals markets. With this step, we will build on our successful track record of pursuing and integrating bolt on acquisitions to enable value creation and profitable growth.”
Clariant also said it had ambitions to grow Lucas Meyer Cosmetics annual sales from $100m (€947m) to $180m (€170m) by 2028.
President of the Clariant Business Unit Care Chemicals and the Americas region, Christian Vang, said: “Lucas Meyer Cosmetics represents a significant, exciting growth opportunity for Care Chemicals. It is a perfect fit with our business, given the complementarity of our customers and products. Combining our respective strengths, including the R&D and innovation capabilities of Lucas Meyer Cosmetics, backed by a strong brand, will enable us to deliver a strong increase in annual sales to USD 180 million in 2028 from around USD 100 million currently. We look forward to welcoming our new colleagues after closing and leveraging our respective capabilities, expertise, and passion,”
Lucas Meyer Cosmetics, which was founded in 1999 and is headquartered in Québec, Canada, is a leading player in the high value active and functional cosmetic ingredients market.
American flavours, fragrances and cosmetics actives company IFF had acquired Lucas Meyer Cosmetics in July 2015.
According to Clariant, the business has strong marketing and innovation capabilities, including global R&D and regional application centres that create a strong financial performance. It said that the business also operates on an "asset-light model" with outsourced production, so is "highly cash generative."
“Weak demand for durable goods persisted”
Meanwhile, Clariant has also released its sales figures for the third quarter of 2023 today, which show that its sales have decreased by 8% organically (-21% in CHF) versus the same period last year. However, it has seen a 2% volume improvement in a challenging market.
Of its latest sales figures, Clariant’s CEO Conrad Keijzer said:
"Our performance is improving, despite continued uncertainties and risks related to the geopolitical and economic environment. On a Group basis Clariant has delivered an underlying sequential quarterly increase of 21% in EBITDA. Organic Group volumes increased slightly compared to the previous quarter, although weak demand for durable goods persisted, which primarily affected our Additives business."
Keijzer continued: "Our proactive measures to adjust our cost base are improving profitability with over CHF 120 million of savings achieved to date out of our CHF 170 million commitment. This, together with our underlying performance improvement, underpinned our strong cash generation in the third quarter. In addition, we continue to see strong Catalysts performance, both in volume and pricing. Despite a continued soft recessionary environment and currency headwinds, we expect to land in our guidance range for 2023. Our focused specialty chemicals portfolio and our highly committed people leave us well-positioned for profitable growth as end markets recover.”
