Croda targeting technology bolt-ons
Croda International (LSE:CRDA), the UK-headquartered provider of specialty chemicals, is focusing its M&A efforts on bolt-on technology buys, according to CEO Steve Foots.
On the 1Q14 sales and revenue call held on 24 April , Morgan Stanley analyst Paul Walsh asked if the company was close to making a transaction. The CEO said Chief Technology Officer Keith Layden had identified 70 technologies of interest, adding that the company was in “extensive discussions” regarding a number of them.
“But our priority is to look at finding these technology bolt-ons, and some significant technology bolt-ons as well,” Foots continued. “And if they're available, then, great. But it's very difficult, at this stage, to plan for when, but we'll update this on a regular basis.”
He added that Croda did not want its debt levels to fall further and was keen to invest in its business on all fronts.
“We've always had a consistent track record of giving it [cash] back to shareholders. We're not spending it ourselves. And so, we're monitoring this on a fairly regular basis,” the CEO added.
Croda’s activities can be broadly classified into three sectors: Consumer Care, Performance Technologies and Industrial Chemicals. Additionally, the company has a Technology Investment Group function, which identifies and integrates new technology into Croda’s global business structure.
A published report in March said Croda had hired investment banker Anthony Fitzpatrick to advise on strategy. The article mentioned talk of M&A surrounding Croda, but did not cite a source for the speculation.
A December 2013 report by this news service, citing a source familiar with the situation, said Croda was seeking biochemical acquisitions. Buys could target any segment in the company’s current markets, including personal and health care, as well as crop chemicals and nutritionals, the report said.
Croda has retained Foley & Lardner for multiple US-based transactions in the past decade, while Slaughter and May and Eversheds have been used for European deals, according to the Mergermarket M&A database. Croda’s non-executive Director Steve Williams is also a non-executive director of Eversheds.
Eversheds and Slaughter and May were named as Croda’s solicitors on its 2012 annual report, while the company’s 2013 annual report named Freshfields Bruckhaus Deringer as its current legal advisor.