Lonza acquires Arch and looks to expand personal care business

By Andrew McDougall

- Last updated on GMT

Related tags: Economics

Lonza and Arch Chemicals have announced an agreement in which the Swiss supplier has agreed to commence a tender offer for 100 per cent of Arch’s outstanding shares of common stock, with the personal care sector expected to benefit.

"The acquisition of Arch Chemicals is the next logical step in Lonza's life science focused strategy,"​ said Stefan Borgas, Lonza CEO.

"It will allow us to expand our non-pharma life science business to achieve a well-balanced profile based upon two world leading growth businesses - pharmaceutical contract manufacturing and microbial control.”

Borgas explained the acquisition of Arch Chemicals will further strengthen Lonza’s position in the microbial control market, insisting there will be substantial value for customers.

Global microbial control market

The global microbial control market is currently valued at approximately €7.2bn/ $10bn, and is growing at 4-6 per cent per annum.

The key end-use segments of the market are water treatment, hygiene, materials protection and personal care, and are growing at faster rates, with the largest markets being in North America, Europe and Japan. The fastest growing microbial control markets are Brazil, India, China and South Africa.

Upon completion of the transaction, Lonza will have the world's leading microbial control business with 2010 pro-forma sales in this life science market of approximately €1.2bn/ $1.6bn, combining the complementary product solutions of both companies.

Global footprint

Given the complementary geographical footprint of both companies, this acquisition will also strengthen Lonza's position in the high-growth economies of China, India, Brazil and South Africa.

In these countries, increasing regulation is expected to lead to greater use of already approved active ingredients and formulations, a trend that is expected to result in further industry consolidation.

"This transaction represents an excellent strategic and cultural fit,”​ continued Borgas.

“Lonza and Arch Chemicals offer highly complementary products and technologies and together will be the global leader in controlling unwanted microbes. The business will enjoy a strong platform for accelerated future growth for the benefit of all our stakeholders."

Michael Campbell, CEO of Arch Chemicals, added: "We are pleased to have reached this agreement with Lonza, a company that knows our business well and shares our commitment to continuous improvement in innovation, operational excellence, safety and sustainability.”

Related topics: Business & Financial

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