Arkema to acquire majority stake in PI Advanced Materials for €728m

Arkema, a French specialty chemicals and advanced materials manufacturer, announced the acquisition of a 54% controlling stake in South Korean company PI Advanced Materials (PIAM) from Glenwood Private Equity.

Valued at €728 million, this transaction positions Arkema as a major player in the global specialty materials sector, benefiting from PI Advanced Materials’ industry-leading position in polyimide films, a sector with robust growth potential within the consumer electronics and electric vehicles markets.

PI Advanced Materials, which has a 30% global market share, leads the industry in manufacturing polyimide films used in advanced consumer electronics and electric vehicles. The company’s high-performance polyimides exhibit exceptional attributes including high temperature resistance, dimensional stability, flexibility, and electrical insulation.

This acquisition opens up new growth prospects for Arkema in the evolving electric vehicles and consumer electronics markets, among other advanced industrial applications.

With two modern manufacturing facilities and two research and development centers in South Korea, PI Advanced Materials employs around 320 people and boasts an impressive sales growth of 12% per year from 2012 to 2021.

Despite a temporary dip in 2022 due to a global slowdown in consumer electronics, the company’s sales are expected to rebound with a growth rate of 13% per year, thanks to innovative product lines, successful customer qualifications in 5G antennas and high-resolution OLED displays, and robust growth in areas such as flexible screens.

Thierry Le Hénaff — Arkema chairman and CEO said: “PIAM is an outstanding company with a unique technological positioning, state of the art manufacturing facilities and invaluable customer relationships. This acquisition is fully aligned with our strategy to be at the forefront of high performance materials for high growth end markets supported by megatrends such as electric vehicles and advanced electronics.

“After the divestment of PMMA, the acquisition of Ashland adhesives and the current start-up of our bio PA11 plant in Singapore, Arkema is delivering another significant milestone of its strategy focused on innovative materials for a sustainable world.”

Arkema to acquire 54% stake in PI Advanced Materials to fortify specialty materials market position. Photo courtesy of Arkema.

The purchase of the 54% controlling stake will permit PI Advanced Materials’ complete consolidation into Arkema’s accounts, while the remaining shares continue to be listed on the Korean stock exchange.

PI Advanced Materials’ addition to Arkema’s portfolio fortifies the latter’s presence in the advanced materials segment, bolstering its high-performance polymer range in markets fueled by global megatrends. This strategic acquisition aligns with Arkema’s vision to become a pure player in specialty materials, extending its influence in high-growth applications.

Significant pre-tax synergies, estimated at €30 million at the EBITDA level, are expected within the next five years due to the synergy of product ranges, Arkema’s global outreach, and PI Advanced Materials’ strong customer base in Asia. The transaction, fully financed in cash, maintains Arkema’s financial stability with a net debt-to-EBITDA ratio within its financial leverage target of 2x.

This acquisition, expected to be finalized by the end of 2023 subject to Chinese and South Korean anti-trust authorities’ approval, propels Arkema towards a stronger foothold in the accelerating demand for specialty materials driven by global megatrends.

Arkema will now focus primarily on organic growth, leveraging its advanced technologies in attractive markets and applications. Concurrently, the company will continue its deconsolidation of the Intermediates segment and prioritize bolt-on operations, especially in adhesives.