By Amna Karimi
- British speciality chemicals group Croda will sell most of its performance technologies and industrial chemicals division to commodities group Cargill Inc in a $1 billion deal, it said on Wednesday.
The sale of the unit, which makes low-carbon, sustainable additives and materials used in applications from food packaging to medical kits and devices, follows a strategic review as Croda shifts focus to its life sciences and consumer businesses.
"We will focus our capital and resources on delivering sustainable solutions and scaling our consumer, health and crop care technologies," CEO Steve Foots said in a statement.
In a separate statement, Cargill said the deal would help broaden its offerings to industrial manufacturers looking for sustainable options.
Croda is selling the majority of the business for an enterprise value of 915 million euros ($1 billion) on a cash-free, debt-free basis, it said.
The business raked in 470 million pounds ($626 million) in revenue last year.
Shares in the company, of the year's best performers in the FTSE 100 index, were down 1.5% at 1120 GMT.
Some investors expecting a higher price for the deal may have been disappointed, Hargreaves Lansdown analyst Susannah Streeter said.
Croda has been focusing its performance tech division towards markets such as renewable technology and electric vehicles.
More recently, the Yorkshire-based company has been supplying vaccine delivery components to Pfizer for its COVID-19 vaccine, which helped it boost overall sales projections.
"Although revenues from Pfizer may wane, there is (an) expectation that there will be growing customer demand for a broader range of use of its products in medical treatments like oncology," Streeter said.
"Recovery in consumer markets has also helped its personal care sector which focuses on ingredients for skin, hair, and cosmetic products."
($1 = 0.8873 euros)
($1 = 0.7509 pounds)