Croda pays £1.7m for US personal care company

NATURAL chemicals group Croda International has snapped up a small US firm to bolster its personal care division.

The Snaith, East Yorkshire-based group said it has bought the assets of Innovachem for $2.8m (£1.7m) in cash.

The company, based in New York, has a “strong customer base” and a portfolio of patented personal care ingredients.

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These are used in products including conditioners which help make hair more healthy-looking and also in cosmetics which smooth, soften and moisturise skin.

“The acquisition is an excellent strategic fit for Croda’s personal care business, adding a number of exciting new product lines and technologies to its existing portfolio and enhancing its ability to service customers around the world,” said the company.

Innovachem had turnover of around $1.5m in 2012.

The deal is the second bolt-on acquisition by Croda under its new management team, headed by chief executive Steve Foots.

In the summer it paid 7.3m euros (£5.7m) for Italian plant cell biotech firm Istituto Di Ricerche Biotechnologiche, and said it planned more small deals.

“Part of our plan was to secure new technology around the world,” said Mr Foots at the time.

“We are looking for acquisitions around the £5m to £20m mark – nothing massive but potentially very interesting to commercialise.

“You should see this as the first with the new management team.”

The FTSE 100 company counts Procter & Gamble, Unilever, L’Oreal and Estée Lauder among its customers.

Late last year Croda also revealed the sale of its loss-making Italian business in Cremona. The business, acquired with Uniqema in 2006, makes fatty acids and glycerine products and was sold for the value of its working capital – thought to be a few million pounds.

The company derives more than half its sales from its consumer care division. It recently said set against “a very strong quarter in 2011”, sales during its July to September quarter were down 2.7 per cent to £140.9m due to slow personal care sales, especially in Europe.

Analysts at Citi said the chemicals sector in Europe should perform well in 2013 but will see more diverse returns compared with last year, as growth will be much more dependent on individual stocks and their response to a sluggish global outlook.

“We expect another year of solid performance in 2013 but we believe out-performance will be more selectively delivered. Our ‘buy’ recommendations focus on structural growth rather than market/cyclical plays,” said Citi in a note.

The bank assigned a ‘sell’ rating to Novozymes, Croda, Solvay and Lanxess, saying the Novozymes and Croda ratings were “valuation-driven”.

Shares in Croda edged down 15p to close at 2,294p.