Croda, Yorkshire chemical giant, mulls divestment

Croda International HQ in Snaith, East Yorkshire

Shares of Snaith, East Yorkshire-based speciality chemicals giant Croda International rose about 4% on Wednesday after it announced a strategic review of its Performance Technologies and Industrial Chemicals (PTIC) businesses.

Croda said the review will assess whether “the full potential of PTIC can best be delivered under Croda, as a stand-alone business, or via a full or partial divestment.”

Croda’s share price rose 4% to around £69.10 to give the FTSE 100 firm a current stock market value of roughly £9.5 billion.

The company’s shares have risen more than 40% over the past 12 months.

The speciality chemicals giant also said the strategic review is being launched “in the context of ongoing improvement in group trading year to date” — continuing the trend seen in the second half of 2020.

“The core objective will be to establish what ownership structure best serves this part of Croda’s business going forward, to create a stronger platform for its future growth,” said Croda.

“The review is consistent with Croda’s prioritisation of investments in faster-growth life science and consumer markets, which now represent over 80% of the group’s profitability.

“PTIC is an excellent, world-leading business, with an impressive financial track record.

“It delivers industry-leading margins across the cycle through well invested manufacturing, innovation and sales operations, supported by a dedicated and experienced global team.

“It has a highly attractive portfolio, offering customers innovative, sustainable solutions in advanced technologies, and is focused on fast-growth markets in the circular plastic economy, electric vehicles and other renewable technologies.

“This strong technology portfolio supports PTIC’s leading market positions in automotive, polymer and food packaging applications.”

Croda added: “The review will assess whether the full potential of PTIC can best be delivered under Croda, as a stand-alone business, or via a full or partial divestment.

“It will consider the extent of the mutual dependencies between PTIC and the rest of Croda, the practicality of all options, whilst prioritising the best interests of all stakeholders, including employees, customers and shareholders.

“The review is expected to conclude by the end of 2021 and, in the meantime, the group will continue to deliver an excellent service for its customers.

“The strategic review is being launched in the context of ongoing improvement in group trading year to date, continuing the trend seen in the second half of 2020.

“Customer demand is strong across all regions and sectors, including PTIC, in some cases driven by a recovery in end-consumer demand, in other areas by customer inventory build ahead of anticipated economic recovery.

“The group will announce its Half Year Results to 30 June on 27 July 2021.”

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