Shares of Croda International Plc (LON: CRDA) surged 3% today after the company announced the acquisition of iberchem, a Spanish fragrances and flavours company, for £736 million.
The chemicals company also revealed that it intends to raise £600 million via a share placement to fund the acquisition.
Croda clarified that the acquisition would add a high-growth consumer business to its portfolio, giving it massive exposure to emerging markets given Iberchem’s presence in 120 countries globally.
Personal care fragrances and home care products account for 80% of Iberchem’s, which bears a close similarity to Croda’s business. Additionally, its Scentium flavours business, which caters to the food, pharmaceutical and oral care markets, contributes the remaining 20% of revenues.
Croda intends to combine its formulation capabilities with Iberchem's expertise to create new ways of meeting customer needs, and it expects to achieve operational synergies worth €25 million annually by the third year and €48 million by the fifth year.
The chemicals company intends to raise the £600 million from institutional investors by issuing shares worth 8% of its current total share capital.
Croda share price
Croda shares surged 3.22% today to trade at 6280p having rallied from yesterday’s closing price of 6084p.