COVINGTON, KY. — Ashland Global Holdings Inc. has entered into an agreement to acquire Pharmachem Laboratories, Inc., an ingredient supplier to the food and beverage industry, for $660 million in a cash transaction. The acquisition is expected to be completed by the end of June.
Pharmachem has annual sales of approximately $300 million. Based in Kearny, N.J., the company manufactures and markets nutrition and fragrance products. A combination of vitamins and dietary supplements, and food and beverage ingredients make up approximately 58% of the company’s sales. Fragrance and flavor ingredients as well as contract manufacturing make up the rest of the company’s sales. Pharmachem has 14 manufacturing plants located in the United States and Mexico.
|William Wulfsohn, chairman and c.e.o. of Ashland Global|
“The acquisition of Pharmachem offers a number of exciting growth opportunities in higher-margin end markets while also strengthening our specialty product line,” said William A. Wulfsohn, chairman and chief executive officer of Ashland. “This combination will enhance our position in fast-growing nutraceutical end markets, open a new opportunity within fragrances and flavors, and strengthen Ashland’s food ingredient business by adding customized functional solutions.”
The purchase price represents a multiple of 10.5x Pharmachem’s estimated fiscal 2017 adjusted earnings. Once the transaction is complete, Ashland’s management anticipates achieving cost synergies from leveraging combined capabilities, as well as tax synergies driven by the integration of Pharmachem into Ashland’s global business structure.“This is a great strategic fit for Pharmachem as we look to build on our well-established track record of growth and financial performance,” said Colin MacIntyre, c.e.o. of Pharmachem. “We have the opportunity to create something unique in our industry by combining Pharmachem’s custom manufacturing capabilities with Ashland’s formulation knowledge and excipients expertise. Together we can drive the next phase of Pharmachem’s growth while contributing to Ashland’s vision of creating the world’s premier specialty chemicals company.”