Image: seekingalpha.com

Ingevity Corp. recently announced it has completed the acquisition of Georgia-Pacific’s pine chemicals business for a cash purchase price of $310 million. The company expects to derive approximately $11 million in net synergies as a result of the acquisition, which are expected to be attained through lower logistics costs, manufacturing optimization among the combined three chemicals plants and leveraged procurement costs.

In purchasing the pine chemicals business, Ingevity has acquired the pine chemicals-related assets at Georgia-Pacific’s Crossett, Ark., plant, saleable inventory, customer lists and the book of business, as well as various patents and trade names associated with acquired product lines. Separately, the company has entered into a 20-year, market-based crude tall oil supply contract with certain of Georgia-Pacific’s paper mill operations.

“This acquisition will provide a stronger platform from which we will accelerate the profitable growth of our performance chemicals segment,” said Michael Wilson, president and CEO. “With the addition of Georgia-Pacific’s broader technologies and product platforms, we will add scale and competitiveness to this segment, and create significant value for our shareholders.”

The acquisition will reportedly complement existing businesses, with limited customer overlap. Georgia-Pacific’s pine chemicals business manufactures and sells pine-based tall oil fatty acids, tall oil rosin, and tall oil rosin esters used in adhesives, coatings, inks, cleaners, metalworking, mining, oilfield, packaging and rubber processing.

“We are excited to welcome new team members to Ingevity, and to bring the significant benefits of this acquisition to our customers,” said Mike Smith, president of Ingevity’s performance chemicals segment. “We anticipate the integration process to run efficiently: Our management team has a history of successfully integrating acquisitions, and experience in operating co-located manufacturing facilities. As we move through this process, we remain deeply committed to ensuring that customers continue to receive excellent products and services.”