Quaker Chemical Corporation and Houghton International have combined to create Quaker Houghton.
The merger aims at creating a global leader in industrial process fluids to the primary metals and metalworking markets.
The combined USD1.6 billion revenue company employs 4,000 associates serving 15,000 customers worldwide. “We are rooted in companies commonly acknowledged as authorities in industrial fluids and valued experts in customer processes,” said Michael F. Barry, chairman, chief executive and president of the new company. Barry, who previously served Quaker Chemical in similar capacities, continued: “Our similar cultures and values, combined with the talent and resources we bring to Quaker Houghton, create exciting opportunities to deliver innovative solutions that will help our customers’ operations run even more efficiently and effectively.”
The company’s combined breadth of product and service offerings can be found in end-markets such as aerospace, aluminium, automotive, machinery, can manufacturing, industrial parts manufacturing, mining, offshore, steel, and tube and pipe industries.
With its expanded products and services portfolio, the company expects that cross-selling opportunities will facilitate continued above-market growth. Specific products the company offers include metal cutting and forming fluids, corrosion protection fluids, specialty hydraulic fluids, and steel and aluminium rolling oils. In addition, legacy-Houghton customers will benefit from Quaker’s strength in specialty greases, high-pressure die casting, mining specialties, surface treatment and bio-based lubricants, while legacy-Quaker customers will now have access to Houghton’s heat treatment quenchants, offshore hydraulic fluids, metal finishing products, and a broader metal removal fluids portfolio.
Value creation for shareholders
The combination of Quaker Chemical and Houghton International nearly doubles the size of either company with trailing twelve month revenue as of 30 June 2019 of USD1.6 billion.
The company expects to achieve significant cost reductions as a result of the combination and has increased its estimate of cost synergies to USD60 million from USD45 million. The cost synergies are broad based and are expected to come from three major areas: asset optimization, logistics and orocurement and operational efficiencies. The cost synergies are expected to be fully realized within tow years.
In addition to cost synergies, the company expects that its growth strategy will create additional value over time. Revenue-based synergies, such as cross-selling, will be an important contributor to growth going forward. The legacy product portfolios of both Quaker and Houghton can now be offered to the combined, complementary customer base, where 14,000 of the 15,000 total customers are unique to one company or the other, says the company. Quaker Houghton also expects to continue to grow through acquisitions which remain part of its core growth strategy.
The combination of the two businesses is a historic date for our businesses, says Barry. “We are finally beginning our journey as Quaker Houghton, and are now the leading global supplier of industrial process fluids to the metals and metalworking markets. Two years from now, we expect to have an enterprise that will be integrated and generating over USD300 million of adjusted Ebitda on a going-forward basis. More importantly, we will be well positioned to continue to achieve above-market growth organically driven by our differentiated business model and the cross-selling opportunities created by our combination.”
Barry continued: “The near-doubling of the size of the company today gives us greater scale to invest in new technologies and make future acquisitions.”