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Tuesday, 20 October 2020
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Markets & companies, Raw materials market

Billion Euro acquisition: Covestro buys resins business from DSM

Wednesday, 30 September 2020

With its first major acquisition since its spin-off from Bayer, Covestro is investing EUR 1.6 billion to acquire the binder and functional materials business of Dutch-based DSM group. DSM has particularly made a name for itself for powder coatings, aqueous binders and bio-based technologies. 

Covestro’s first major acquisition is strengthening its coatings business. (Picture: Covestro)

Covestro’s first major acquisition is strengthening its coatings business. (Picture: Covestro)

According to Covestro, the acquisition is expected to contribute an annual turnover of just over one billion euros to the company's turnover and support pre-tax profits by more than EUR 140 million.With the takeover, Covestro intends to diversify its business and significantly increase the sales of the Coatings, Adhesives, Specialties (CAS) business unit.

After the full integration of DSM's binder business, this would amount to EUR 3.4 billion, some 40% above current levels. Covestro's group-wide turnover is currently around EUR 12.4 billion per year.

DSM strong in sustainable technologies

DSM's business includes a wide range of water-based polyacrylate binders, aqueous hybrid technologies, powder coatings and radiation-curing binders. With the launch of its "Decovery" series, DSM had also shown great ambition in the field of bio-based binders in recent years. The acquisition also includes DSM's coating business for fibre optic cables and binders for 3D printing.

Covestro is the market leader for polyurethanes and polycarbonates. Acquisitions in this segment, however, are likely to be rather difficult as it is questionable whether competition authorities would readily accept commitments in this area. The acquisition is expected to take place in the first quarter of 2021 and the full integration is expected to be completed by 2025. In addition to the effects on sales, Covestro expects synergies worth around 120 million euros per year.

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