Investors have designs on admixtures

Acquisitions and related corporate maneuvers in the domestic and global admixture, construction chemical and companion materials business parallel the 2015-16 realignment of major North American cement, aggregate and ready mixed concrete producers noted here in January (“Mergers, acquisitions, musical chairs define back-to-back watershed years”). Consider more than two years of activity just beyond the sphere of North American market leader BASF Construction Chemicals:

Cambridge, Mass.-based GCP Applied Technologies announced a $1 billion offer from Germany’s Henkel for its Darex Packaging business early last month, positioning the former Grace Construction Products entity to go deep and narrow in concrete and cement additives. The deal surfaced a year after GCP Applied Technologies was launched as a separate, New York Stock Exchange-traded company from W.R. Grace & Co. Short for Grace Construction & Packaging, GCP has a focus true to the original Grace Construction Products. It is poised to extend its concrete and cement portfolio with additives like Clarena (see page 18), whose clay-neutralizing characteristics spell new life for reserves of otherwise marginal sand & gravel.

Investor interest in construction chemicals, dovetailing the prospective Darex deal cash infusion, has helped drive GCP shares to levels 50 percent higher than their initial February 2016 valuation. Shortly after the Darex announcement and share price spike, an international private equity firm with Europe-centric portfolio, Cinven Partners LLP, entered negotiations to acquire concrete, cement and construction chemical specialist Chryso Group. Based outside Paris, the business has 29 manufacturing facilities, four research & development centers and 1,100-plus employees across Chryso Inc. in Rockwall, Texas, and sister operations.

“There are considerable opportunities to grow the business organically, as well as through acquisitions and developing into new geographies,” said Cinven Partner Nicolas Paulmier. “Cinven has a significant track record of working with companies to support their buy and build strategies and internationalizing their businesses.”

“Chryso is extremely well positioned to benefit from attractive market drivers, including increasing concrete consumption for infrastructure and housing globally; the greater complexity and scale of construction projects, with tougher requirements on building materials’ performance; and a growing focus on sustainable development,” added Chryso Group CEO Thierry Bernard.

A Chryso competitor with North American and western Europe foothold was the centerpiece of a business realignment formalized earlier this year at World of Concrete. Cleveland-based RPM International outlined the newly formed Euclid Group, encompassing the namesake concrete admixture business, plus sister subsidiaries, operating companies or brands in construction, mining and tunneling products; specialty polymer flooring; grouts and leveling compounds; and, parking deck coatings. President Mark Greaves bills Euclid Group as one of the world’s foremost construction chemicals companies, with 34 manufacturing facilities in 14 countries, a sales presence in 55 countries, and 2,100-plus staff members.

As developments in the U.S. and Europe took shape around peer companies, Switzerland’s Sika AG was scouting acquisitions complementing operations on its home turf and that of New Jersey-based Sika Corp. In 2016, the latter assimilated L.M. Scofield Co., affording North American and overseas Sika businesses a brand synonymous with premium, decorative concrete; and, Alabama’s FRC Industries, which brought synthetic fiber production to the Sika Corp. portfolio of admixtures, construction compounds and packaged materials.

Current investment activity engulfing the North American construction chemical market started in late 2014, when Florida-based Mapei Americas absorbed Midwest-centered admixture producer General Resource Technology of Minnesota. The move complemented Mapei Americas’ adhesives, coatings, grouts and mortars portfolio, and created a foothold in the North American admixtures business—mirroring what parent company, Italy’s Mapei S.p.A., enjoys in Europe.

Ownership changes and investor commitments across the admixture and construction chemicals spectrum—from GCP and Chryso to Euclid, Sika and Mapei—will foster competition, research & development efficiencies, and innovations benefitting concrete producers and their customers.