Cognis to sell its leather business
14/07/2008
Specialty chemicals supplier Cognis has signed an agreement to sell its Pulcra Chemicals subsidiary—the part of the business that serves the leather industry—to Germany-based Fashion Chemicals for EUR 26.3 million.
Fashion Chemicals is an investor backed mainly by DSD Deri Sanayicileri Dis Ticaret, based in Istanbul, Turkey, an organisation with established connections to the leather industry. The stakeholders of DSD include leading tanneries and leather manufacturers.
Cognis said the proposed sale was in line with its strategy of focusing on “core businesses driven by the wellness and sustainability trends”. Agreements respecting the transfer of the business and related transactions were signed on July 14 in Düsseldorf.
Approximately 9% of the cash for the deal will come from members of Pulcra Chemicals’ senior management team. Fashion Chemicals additionally took over EUR15 million of financial liabilities (including debts and pensions). The final transaction is subject to usual closing conditions including regulatory approvals and is expected to be completed by the end of October 2008.
Pulcra Chemicals, which supplies process chemicals to the leather and textile industries, was previously the Process Chemicals strategic business unit (SBU) of Cognis. The SBU was carved out into separate legal entities on July 1, 2007, and renamed Pulcra Chemicals. Pulcra operates production sites and service centers in Brazil, China, Germany, India, Indonesia, Italy, Mexico, Spain, Turkey and the USA. In 2007, Pulcra Chemicals reported external sales of 246 million euros.
Antonio Trius, CEO of Cognis, commented on announcing the development: “We are sure that Fashion Chemicals supported by DSD with its deep understanding of market requirements is an excellent fit and will help Pulcra Chemicals to develop its business successfully as well as safeguard its long-term competitiveness.”
For his part, Yusuf Aktalay, chief executive of Pulcra Chemicals and chief executive-designate of Fashion Chemicals said: “We are delighted to gain an investor to support us on building up our core business. With over 125 years of experience, we have an in-depth knowledge of both the regulatory environment in our key markets and also the prevailing trends relating to health and safety, ecological sustainability and wear comfort. We are therefore well placed for operational success as we move forward.”
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