UK-based Croda is set to purchase a 65% stake in Sichuan Sipo Chemical Co.
The deal will give the European manufacturer a foothold in China’s lucrative car additives market. To date, Croda Interational has built its reputation as the world’s second-largest maker of cosmetic ingredients.
The company will pay a multiple of almost 19 times earnings before tax, interest, depreciation and amortisation for the majority stake in the Chinese chemicals firm.
Croda CEO, Steve Foots, is hoping the acquisition will help the company achieve “fast growth” in a market the UK-company is “starting to know better.”
As worldwide demand for cosmetic ingredients slows, Croda is diversifying its interests into lubricants additives. Furthermore, with the company’s performance technologies business also showing signs of decline, it is hoping the new purchase will help it gain a foothold in one of the world’s fastest growing auto markets.