Written by Jonny Williamson
Cytec Industries’ $439 million bid is thought to be part of its future plans to expand and build on its growing composites business, and has been unanimously approved by the boards for both companies.
Cytec’s Chief Executive, Shane Fleming, commented on the proposed acquisition:
“This would greatly improve our presence in an industrial sector where we see tremendous potential for significant value creation and growth. The acquisition also enhances our near-term composite capacity while we complete capital investments.”
“(The acquisition of) Umeco will provide us with additional scale, a dedicated supply chain well-tailored to the needs of the high performance industrial sector and application development capabilities that will help us respond quickly and effectively to customer needs.”
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Umeco, whose customers include Boeing, Airbus and BAE systems, has so far not released an official statement regarding the proposed bid.
The new purchase could prove lucrative for Cytec as the automotive industry begins to increasingly take advantage of composites durability and strength, coupled with a low overall weight, such as carbon fibre. Reducing a vehicles total weight is seen as an important step towards raising fuel efficiency and lowering carbon emissions in the wake of rising oil prices and environmental targets.
Umeco already have experience in this field having previously made composite materials for Formula One racing cars and other high-performance vehicles.
However it is not too late for a higher bid from another company, such as Hexcel Corp, a US firm rumoured to be considering submitting a counter offer. Umeco’s composite materials are ideally suited to complement Hexcel business of manufacturing carbon fibre and other composites.