On September 18, Clariant of Switzerland announced this move. On the same day, the company announced that it would merge some of its masterbatches and additives business with some of the plastic material product lines of Saudi Basic Industries Corp.
The company's executives said at a press conference: "The pigments, masterbatches and medical specialty products business does not meet the Group's standards and cannot stand out through innovation in high-growth and high-profit areas.
They added that although these divisions would be divested, they were “well-positioned” and “have significantly improved their profitability over the past few years”.
The company's executives said the businesses "will continue to be managed with differentiated business guidance." They added that the growth of the pigment and masterbatch business is expected to keep pace with GDP, while medical specialty products are expected to achieve faster growth, consistent with their potential end markets in medical packaging.
The profitability of the pigment and masterbatch business “is expected to be greatly improved through strict cost management”, while the medical specialty products business “will benefit from innovation to achieve profitable growth”.
Clariant executives revealed more details about the sale and details of the business that will remain with the company. They confirmed Clariant's masterbatch division's high-value business-the part that will be merged with the business of Sabic-including pigments, high-temperature resins and plastic solutions for healthcare packaging.
Clariant runs masterbatches as an independent unit, but its product business includes plastics and coatings, and is not separately reported in the company's financial documents. Sales of plastics and coatings in 2017 were reported to be approximately $ 2.6 billion.
According to Clariant executives, about $ 1.1 billion of this money went to the Sabic division. The remaining $ 1.5 billion in sales included sales of pigments, masterbatches and medical specialty products.
Regarding the medical specialty products business, executives said that after a careful review of Clariant's and Sabic's businesses, "it is clear that there is not enough commercial synergy between Clariant Medical Specialties and Sabic's healthcare products …. Therefore, the company decided not to include it in its business consolidation. "
Clariant Medical Materials will continue to work with Sabic, including healthcare polymer solutions, which are FDA (Food and Drug Administration) compliant materials that are sold to applications such as drug delivery, diagnostics, invasive equipment, and drug packaging field.
According to market sources, approximately $ 250 million of Clariant's $ 1.5 billion business is from the standard masterbatch business. The business competes with competitors such as PolyOne, Ampacet Corp. and LyondellBasell's subsidiary A. Schulman.
Market sources said LyondellBasell is a potential buyer of Clariant's masterbatch business. They added that private equity firms may also be interested in using the business as a basis for accumulated opportunities.
Sabic, based in Riyadh, Saudi Arabia, previously secured a nearly 25% stake in Clariant. The combined Clariant / Sabic Specialty Products division has annual sales of approximately $ 4 billion and includes Sabic's well-known brands Ultem and Noryl, which are derived from GE Plastics.