Shares in chemicals company CRODA (CRDA) dropped 1.3% to £98.42, after announcing it had agreed to sell the majority of its performance technologies and industrial chemicals business, to Cargill Velocity in a deal worth €915 million (around £778 million).
The deal reduces Croda’s cyclical exposure, and will provide it with additional resources to invest in the healthcare sector and spend on potential acquisitions of disruptive technologies to enhance its position in consumer and crop care.
The decision to dispose of PTIC (performance technologies and industrials chemicals) followed a strategic review in May.
The businesses being sold had annual revenues of £510 and profits of £54 million last year.
Croda employs 5,000 people in 38 countries and is best known as a supplier of the chemicals in skincare products for Boots, Unilever (ULVR) and L’Oreal.
The faster-growth life science and consumer markets now represent over 80 per cent of the group’s profitability.
PFIZER OPPORTUNITY
Pfizer has a five-year non-exclusive supply agreement for lipid systems with Croda. These are crucial for mRNA treatments - like mRNA Covid-19 vaccines including the ones developed by Pfizer and Moderna.
In response to robust demand the group is making significant investments in its lipid production capacity. It intends to double the capacity of its American site, while quadrupling the capacity of its UK site.
The Pfizer contract followed the $185 million acquisition in August of Avanti, an American business that makes lipid-based delivery systems, used in the new mRNA technology.
Croda raised its sales forecast from the Pfizer contract to at least $125 million in 2021, from $100 million in November.
