Evonik president: $3.8 billion Air Products’ deal marks a ‘beginning’

Anthony SalamoneContact ReporterOf The Morning Call

“We want to keep that going, which speaks very strongly for staying in the Lehigh Valley.”

Both companies said earlier Tuesday that they completed the $3.8 billion deal by which Evonik has acquired Air Products’ performance materials division. Performance materials includes products such as curing agents and additives used in construction, marine, automotive and other products.

During an interview inside Air Products’ headquarters, Rolando said the company will move carefully during the next six months to a year as Evonik understands more about Air Products’ operations and integrates it into Evonik’s portfolio.

“What we want to really be certain about is that if we disconnect a pipe in the process, we have the right place to reconnect it to,” said Rolando, who became president about three years ago of Evonik Corp., which is the U.S. subsidiary of Evonik AG.

Rolando said he received only one employee question — about the company’s long-term plans for the Valley.

“I think there was a sense of relief that finally the day came,” said Rolando of the employees. “But we also made it clear that this isn’t the end; it’s the beginning.”

That beginning on Tuesday included employees meeting with human resource officials, filling out benefits forms and reviewing Evonik’s code of conduct. Roland, who sat during the interview in Air Products’ cafeteria amid Evonik signs and purple and white balloons, said employees’ salaries and benefits will be “consistent” with what workers received at Air Products.

Keeping Evonik remains a priority for business and community leaders, though Matthew Tuerk of Lehigh Valley Economic Development Corp. said there has been no communication between LVEDC and the company in recent months.

“We look forward to working with them in the Lehigh Valley,” said Tuerk, who is LVEDC’s vice president of economic development and marketing. “We have a great relationship with German companies, particularly with companies doing advanced material work. It makes a lot of sense for them to operate here.”

The presence of colleges such as Lehigh and Lafayette also is a plus, as are a large contingent of German companies with local operations including B. Braun, Bosch Rexroth and Hydak, Tuerk and others have noted in promoting the region.

Rolando said the company plans to talk about its plans with local and state officials “in the coming weeks and months.”

“We see opportunity for growth here,” he said.

Evonik said in May, when the two companies first announced the deal, that it had no immediate plans to move or remake the former Air Products’ division, which has about 1,100 employees globally. News first emerged two months earlier about talks between Evonik and Air Products for Evonik to acquire the Trexlertown company’s business segment.

For Air Products, the sale is in sync with the long-term corporate strategy Seifi Ghasemi has implemented since becoming CEO in summer 2014. Last year, the company said it aimed to split into two publicly traded companies: materials technologies, which houses the performance business, and industrial gases.

Air Products issued a five-paragraph news release about the Evonik deal on its corporate website. Air Products said in closing the deal, and under the terms of the agreement, “operational facilities, supplier contracts, labs, contracts, customers, and employees and certain legal entities” of the performance materials division have been transferred to Evonik.

“I am pleased that we completed the sale of PMD in the time frame we promised and congratulate both the Air Products and Evonik teams who worked hard to achieve this goal,” Ghasemi said in the release.

Air Products’ materials technologies unit, whose products supply the semiconductor and other industries, became a spinoff company last fall called Versum Materials. Versum, which employs about 250 in the Lehigh Valley, moved its headquarters last year from Trexlertown to Tempe, Ariz.

Evonik expects to achieve “synergies” of $80 million per year with the Air Products deal. Rolando described the synergies as aligning the companies’ production assets and vendors. Aligning production does not mean closing or moving facilities, he said.

Air Products, one of two Fortune 500 companies based in the Lehigh Valley, employs about 17,000 people in 50 countries, including about 3,000 in the Valley. Its stock closed Tuesday down 44 cents, to $143.38 per share, in New York Stock Exchange trading.

Evonik shares, which are traded on the Frankfurt stock exchange, closed up slightly Tuesday, to $29.83 a share, roughly within its 52-week range.

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THE AIR PRODUCTS-EVONIK DEAL

•What is Evonik? Evonik is a German-based, specialty chemicals company that is active in more than 100 countries and employs more than 33,500 people. In fiscal 2015, it had $15.2 billion in sales.

•What is Evonik acquiring? Air Products’ performance materials division, which consists of epoxy curing agents (40 percent of PMD revenue), polyurethane additives (32 percent) and specialty additives businesses (28 percent).

•Will Evonik keep a Valley presence? Evonik North American President John Rolando said the company has a two-year lease inside Air Products’ Trexlertown headquarters. Rolando said Evonik is not planning to close any Air Products’ sites, but it is not rushing to any long-term decisions on its future here.

•What else? Air Products in September completed the spinoff its electronic materials division, named Versum Materials. That division employs 1,900 people globally, including 250 in the Lehigh Valley, with headquarters in Tempe, Ariz.

http://www.mcall.com/business/energy/mc-air-products-completes-sale-to-evonik-20170103-story.html