US acquisition helps Croda to strengthen green credentials

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CRODA International – the company behind Lorenzo’s Oil – has secured an acquisition which could help it to develop new consumer products.

Natural chemicals company Croda has bought a leading US oil gelling polymer business, for a price believed by analysts to be in the region of $12m.

The Snaith-based company has completed the acquisition of the speciality products business of Arizona Chemical, which is based in Jacksonville, Florida.

The group, which sells chemicals to international beauty firms such as L’Oreal and Estee Lauder, said the acquisition will strengthen Croda’s leading position in speciality chemicals, derived from renewable resources.

The US company’s technologies and products are naturally derived polyamides with high bio-renewable content, and are covered by a range of patents.

Keith Layden, Croda’s chief technology officer, said yesterday: “This acquisition represents further progress in our strategy to acquire complementary new technologies.”

No manufacturing assets will be acquired as part of this deal and Croda will immediately move the products to its Mevisa manufacturing site in Spain.

It plans to re-launch the products with new trade names and marketing identities.

In an equity research note, analysts from JP Morgan Cazenove said: “Today’s acquisition is relatively small, believed to be in the region of $12m, but confirms Croda’s commitment to growth through innovative products and renewable raw mater- ials.

“The naturally derived polyamide products acquired from Arizona Chemical should complement Croda’s product portfolio in both the consumer care and performance technology divi- sions.”

According to JP Morgan, the applications are complementary to Croda’s current port- folio.

The note added: “The acquired polyamide patents have applications in sun creams, cosmetics, skin care, air fresheners and various industrial uses, adding to the portfolio of both the consumer care and performance technology divisions.

“Key current application areas in personal care are mascara, lipstick and sun protection prod-ucts.

“These are all areas where water repellency plays a key role in product performance.”

The fact that no manufacturing assets will be acquired should also boost margins, while management are bullish on opportunities for further development, according to JP Morgan.

Earlier this year, Croda confirmed that it was seeing strong demand for its sustainable skin care products as cosmetics giants such as L’Oreal and Estee Lauder turn their back on suppliers that can’t prove their green credentials.

Pre-tax profits in the year to December 31 2012 rose seven per cent to £253m, despite tough market conditions and the adverse effect of currency translations. Sales over the year rose two per cent to £1.05bn.

In February, Croda’s chief executive Steve Foots said the group was on the hunt for further acquisitions in leading edge technologies following the acquisition of two complementary businesses last year.

In July 2012, it bought Italian company IRB, the global leader in plant stem cell technol- ogy.

Millions of people who have never set foot inside a natural chemical plant will have heard of Croda International because of Lorenzo’s Oil.

Michaela Odone and her husband Augusto made headlines around the world when they defied enormous odds to find a way of alleviating the symptoms of the rare genetic disorder adrenoleukodystrophy (ALD), which struck their six-year-old son Lorenzo in 1984.

The story of the Odones, two lay people who took on the medical establishment, inspired a film, which starred Susan Sarandon and Nick Nolte.

It told how the American couple refused to accept that Lorenzo had only two years to live.

They tried to find a treatment that would increase the length and quality of his life.

To help them, Croda devised Lorenzo’s Oil, a specially refined blend of olive oil and rapeseed oil.

Although there’s no cure for ALD, research suggests that Lorenzo’s Oil may delay or reduce the symptoms.

In 1989, the Odones established The Myelin Project, which brought together scientists and families affected by diseases like ALD and multiple sclerosis.

Lorenzo died aged 30 in May 2008.

greg.wright@ypn.co.uk