This article first appeared in The Edge Financial Daily on December 13, 2017 - December 19, 2017

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) plans to acquire Elementis BV’s surfactant chemicals business and its 16.2ha Delden manufacturing plant in the Netherlands for a total enterprise value of €39 million (or RM187.2 million) on a cash-free debt-free basis and with a normal level of working capital.

In a filing with Bursa Malaysia yesterday, KLK said its wholly-owned subsidiary Kolb Distribution AG had entered into an agreement with the global specialty chemicals company to acquire its entire interest in Elementis Specialties Netherlands BV (ESN), comprising 3,404 shares of a nominal value of €1,000 each, together with its working capital, plant and machinery, storage facilities, laboratories and all other tangible assets and inventories associated with the surfactant chemicals business conducted at ESN’s plant in Delden.

KLK also intends to take over ESN’s contracts, claims, supplier and customer lists, business books and intellectual property relating to the business.

ESN is wholly owned by Elementis, which is part of Elementis plc, a global specialty chemicals company listed on the London Stock Exchange.

KLK, Elementis and ESN on Dec 11, 2017 executed a signing protocol where they have agreed to obtain the prior advice of the Dutch Works Council (WC condition) with respect to the proposed acquisition within four months.

In the event the WC condition is not satisfied/waived, the proposed acquisition will not proceed.

KLK said the Delden site will expand Kolb’s existing business portfolio in terms of product range and market coverage.

“The use of the Delden site as another hub for the KLK group’s market penetration strategy will further accelerate growth in the group’s downstream chemical specialties business in Europe. The Delden production site is serviced by good rail and road links, and is located strategically close to key customers and raw material supply routes,” it said.

KLK added that ESN comes with a large established customer base and is expected to generate overall benefits to KLK’s chemical business.

The proposed acquisition will be funded by a combination of KLK’s existing cash reserves and bank borrowings.

The group expects to complete the acquisition in the first half of 2018.