Ashland acquires Pharmachem, making new inroads in the fragrance industry
Ashland paid $660m for the privately owned Pharmachem Laboratories, Inc., according to a press release about the acquisition, which describes the lab as “a leading provider of quality ingredients to the global health and wellness industries and high-value differentiated products to fragrance and flavor houses.”
Give and take
Ashland met that price with a combination of cash on hand and borrowed funds, which were “proceeds of a borrowing under its existing securitization facility, a new 3-year senior secured term loan A facility, a new 5-year senior secured term loan facility and a new 5-year senior secured revolving credit facility,” as the press release explains.
Ashland expects to see added value from the deal within the coming 12 months. Pharmachem, before the acquisition, brought in annual revenue of around $300m.
Us and them
Headquartered in New Jersey, Pharmachem has manufacturing facilities across the US and Mexico, 14 in all, where custom and branded fragrance and wellness products are made. “The addition of Pharmachem offers attractive growth opportunities in higher-margin end markets and strengthens our existing business with advanced processing know-how and formulation expertise,” William Wulfsohn, Ashland chairman and CEO, tells the press.
“We believe this combination will enhance our position in fast-growing nutraceutical end markets, open a new opportunity within fragrances and flavors, and strengthen Ashland's food ingredient business by adding customized functional solutions,” adds Wulfsohn. “In addition, we expect to leverage our extensive sales channels, technical service network and global applications labs to accelerate Pharmachem's growth.”
It’s that expanded reach which Pharmachem execs see as the primary advantage of the deal. “This is a great strategic fit for Pharmachem as we look to build on our well-established track record of growth and financial performance,” Colin MacIntyre, CEO of Pharmachem said in April when the deal was first publically discussed.
“We have the opportunity to create something unique in our industry by combining Pharmachem's custom manufacturing capabilities with Ashland's formulation knowledge and excipients expertise,” MacIntyre told the press. “Together we can drive the next phase of Pharmachem's growth while contributing to Ashland's vision of creating the world's premier specialty chemicals company.”