ELKEM to acquire Chinese silicone manufacturer Polysil

Chinese leading silicone elastomer & resins material manufacturer Polysil has entered into an agreement with Elkem ASA to sell all of the shares to the later.

With strong positions in baby-care and food-grade silicones, as well as silicone products for the electronics and medical markets, Polysil and Elkem’s complementary product and market positions provide a solid platform for further specialization and growth in China and globally.

Polysil is a privately owned company with more than 350 employees located in Zhongshan in Guangdong, China. The company has leading technology positions in production and development of Heat Cured Rubber (HCR), Liquid Silicone Rubber (LSR) and specialty resin and Pressure Sensitive Adhesives (PSA). Polysil has two production facilities and a research and development centre with more than 50 engineers.

In 2019, Polysil is estimated to generate a total operating revenue of RMB 612 million (around $88 million) with an EBITDA of RMB 110 million ($16 million).

The companies have agreed an enterprise value for Polysil of up to RMB 941 million ($135 million), including potential bonus and earn-out depending on pre-agreed criteria. 

“We are continuing to deliver on our growth and specialisation strategy. Acquiring Polysil will strengthen our position in selected specialised silicones segments in China. There are considerable synergies in leveraging Elkem’s upstream capabilities to supply raw materials and intermediates, and in combining both the product portfolio and the domestic and global market positions of Polysil and Elkem,” says Michael Koenig, CEO of Elkem.

Approximately 90 % of Polysil’s revenues are generated in China, primarily in South China. Elkem’s presence and positions in other parts of China and internationally provide a solid platform for Polysil’s products and for further growth.

“Polysil is very pleased to become part of the Elkem group and looks forward to working closely with Elkem in achieving common goals. Elkem’s products, knowledge and brand complement the Polysil product range and will benefit Polysil customers going forward,” says Hanxi Ma, the largest shareholder of Polysil.

“Polysil’s products and market positions in food, baby care, electronics and medical markets are complementary to Elkem. Polysil has particularly strong positions in the fast-growing South China market where approximately half of all Chinese silicone rubber consumption is. There is significant potential in utilising Polysil’s high-end liquid silicones rubber and pressure sensitive adhesives specialty positions and in further developing both products and markets. Polysil’s strong research and development capabilities will be very important for development of products for both the Chinese market and globally,” says Frederic Jacquin, Senior Vice President Elkem Silicones.

Completion of the acquisition is subject to final regulatory approvals. Closing is expected by end of first quarter 2020.