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Acquisition positions Cargill to supply the growing need for bio-based solutions for plastics, automotive and other industries

As demand for bio-based industrial solutions continues to grow, Cargill has entered into an agreement to acquire Arkema’s epoxides business, which includes a facility located in Blooming Prairie. 

The offer values this activity at US $38.8 million, which is around 10 times historical EBITDA.

After closing, the investment will give Cargill end-to-end production capabilities in bio-based plasticizers and polyols and enable the company to better serve its industrial customers with nature-derived alternatives to traditional petroleum-based additives.

“Industrial customers are increasingly searching for solutions made without petrochemicals, especially in consumer applications where potential concerns around toxicity and sustainability continue to grow,” said Kurtis Miller, managing director in Cargill’s bioindustrial business in a press release Monday. “Adding this capability will allow us to innovate across the polyol value chain, transforming our vegetable oil into highly functional compounds that bring benefits like flexibility, durability and heat stability to a wide range of industrial products.”

Arkema produces bio-based and specialty epoxides used as additives or intermediates in the manufacture of lubricants, plastic additives and a wide variety of other applications. Part of Arkema’s Hydrogen Peroxide activity, this business has limited integration with the rest of the Group’s portfolio, generates sales of around US $40 million and employs approximately 45 people. 

These specialty oils, or epoxides, are key components for Cargill’s existing portfolio of bio-based plasticizers and polyols. With this acquisition, Cargill will gain full control of their production process, transforming its commodity soybean oil into epoxides, and ultimately, creating the bio-based plasticizers and polyols used to make a broad range of products that support the conveniences of everyday life, such as shower curtain liners, tiles, carpets and furniture.

By combining the Arkema manufacturing capabilities with Cargill’s bioindustrial expertise, the company expects to further support its plastics, automotive, medical, furniture, flooring and specialty chemicals customers with a broader portfolio of bio-based solutions for applications like polymer and lubricant modifiers, coalescing agents for paint and foam for furniture.

Cargill expects to offer the affected employees of Arkema positions within the Cargill’s bioindustrial business, which in addition to bio-based plasticizers and polymers, also develops nature-derived solutions for construction, power generation, performance chemicals, and binders and adhesives.

 The acquisition builds on other recent moves by Cargill to expand its presence in the bioindustrial space, including its recent partnerships to build a bio-butanediol facility, its acquisition of specialty beauty ingredient supplier, International Floratechnologies, and, together with its joint venture partner, PTT Global Chemical, develop a greenfield of an integrated NatureWorks facility in Thailand.

The deal is expected to close in the fourth quarter of 2021.