Arkema Takes Over Dow's Flexible Packaging Laminating Adhesives Division

Arkema has entered into an agreement to purchase Dow’s flexible packaging laminating adhesives division, a prominent player in the adhesive sector for flexible packaging, with yearly revenues reaching approximately US$250 million. This prospective acquisition is poised to greatly enhance Arkema’s array of solutions tailored for flexible packaging, positioning the Group as a major contender in this appealing market.

Dow’s division specializing in flexible packaging laminating adhesives presents a wide array of top-tier solutions catering to food and medical applications, where flexible packaging stands out for its efficiency. Additionally, it serves the industrial lamination sector, including applications like window films and photovoltaic backsheets. Forecasts indicate robust growth in the flexible packaging market, expected to outpace GDP rates in the upcoming years, primarily fueled by the demand for more sustainable and recyclable alternatives. With state-of-the-art technologies, renowned brands such as ADCOTE™ and MOR-FREETM, and five advanced production facilities located in Italy, the United States, and Mexico, Dow’s laminating adhesives division has established itself as a key solutions provider within the packaging industry, boasting a significant presence across North America and Europe.

Enhanced by Bostik's current commercial footprint, product range, and technological expertise in flexible packaging, this integration will strategically augment Bostik's established operations. Signifying a significant advancement, it presents a distinctive opportunity for Bostik to establish itself as a primary global partner for clientele within the packaging sector.

In addition to capitalizing on the projected market expansion and recovery in the forthcoming years, Arkema seeks to swiftly seize fresh growth prospects and achieve a substantial and harmonious balance of cost and development synergies. These synergies are anticipated to amount to approximately US$30 million in EBITDA within a span of five years.

The proposed acquisition aligns seamlessly with the Group’s strategic vision to broaden its presence in cutting-edge technologies and burgeoning markets, marking yet another significant stride in bolstering the future expansion of its Adhesive Solutions segment. Anchored on an enterprise value of US$150 million (approximately 10 times 2024F EBITDA), the acquisition is anticipated to entail implementation costs or capital expenditures totaling around US$50 million over the subsequent three years.

"We are pleased to unveil this significant acquisition, which seamlessly aligns with Arkema's strategy of delivering innovative products with advanced technological features to our customers, while further advancing our position in the dynamic adhesives segment. This acquisition will enable both the Group and Bostik to expand their commercial and geographical footprint in the packaging sector, enhancing their product portfolios to address the evolving demands of this rapidly changing market, particularly in terms of sustainable development. We extend a warm welcome to Dow's teams as we embark on this new phase of development," remarked Thierry Le Hénaff, Chairman and CEO of Arkema.

The project is contingent upon the approval of specific antitrust authorities and is anticipated to conclude in the fourth quarter of 2024.