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Synthomer lines up European carveouts for 2024, sources say

Synthomer [LON:SYNT] is exploring several carveouts of its European assets, according to three sources familiar with the situation.

The British chemicals business is looking to divest its Compounds and Paper Latex units, both of which sit within the wider Paper, Carpet & Foam division, according to all of the sources, with banks believed to have been selected to run an auction.

According to one of the sources, Synthomer’s Compounding business is being marketed off EBITDA of GBP 10m, and the unit has sites in the Netherlands and Germany.

One of the sources added that Synthomer may also consider offloading its Additive Solutions unit.

The potential carveouts would follow Synthomer’s attempted sale of its William Blythe division last year. The inorganic materials unit was expected to be marketed off EBITDA of GBP 7m – GBP 8m, but interest in the sale has since waned.

As previously reported, Synthomer’s SBR Latex and Acrylic Monomers operations have also been flagged as potential exit options. These units sit within Synthomer’s Health & Protection and Coatings divisions, respectively.

The potential divestments come as Synthomer reported a drop in revenue across the board for its various units, according to its most recent financial report.

Synthomer’s Coatings & Constructions Solutions division saw revenue drop to GBP 55.1m in 1H23 from GBP 80.3m the previous year while Health & Protection and Performance Materials saw revenue fall to GBP 11.3m in 1H23 from GBP 59.2m a year earlier, according to the company’s half-year 2023 report. Synthomer’s EBITDA fell to GBP 72m for 1H23 from GBP 162.8m a year earlier.

In 2019, Synthomer launched a strategic review of its SBR latex operations, following which it decided to close its facilities in Finland and reduce production in Germany in response to declining demand. SBR latex is used for the coating of graphic and packaging paper, and the move to electronic media has put a strain on the paper market.

At the end of 2022, Synthomer sold its OMNOVA laminates unit to Surteco Group [ETR:SUR].

The company’s share price sits at 146.8p as of today (February 29). The shares are down 20% year-to-date, for a GBP 240m market cap.

Last month, this news service flagged Synthomer as a potential takeover target for 27% shareholder Kuala Lumpur Kepong, which attempted to acquire the business last year.

Synthomer declined to comment.