Zacks_Analysts' Blog : W.R. Grace to Buy Synthetech - Analyst Blog

Specialty chemicals maker W.R. Grace & Co. (GRA) has announced a definitive agreement to acquire Synthetech, a producer of fine chemicals with a focus on organic synthesis and biocatalysis. The transaction is valued at about $19.2 million, less Synthetech’s debt balance as well as transaction costs.



The acquisition has received approval from the boards of both companies, but is still pending approval from Synthetech’s shareholders as well as other regulatory clearances. W.R. Grace expects to complete the transaction between October and December 2010.



With this acquisition, W.R. Grace will acquire capacity to make specialty single-site as well as polypropylene catalysts, which are used to produce plastics. In addition, Synthetech’s expertise in fine chemicals in peptide intermediate synthesis will enlarge W.R. Grace’s offerings in the area of discovery sciences for the pharma industry.



In this regard, Synthetech’s existing arrangements within the pharma industry and its experience in the development-phase of patented drugs will broaden W.R. Grace’s product portfolio in the discovery sciences business.



W.R. Grace believes that the incoming technical know-how, along with the manufacturing capabilities of Synthetech, marks a significant building block for its polyolefin catalysts segment. Further, this acquisition obviates the need for setting up a facility from scratch as Synthetech provides immediately available production capacity for specialized single-site and polypropylene catalysts.  



W.R. Grace makes single-site and polypropylene catalysts (such as POLYTRAK and SYLOPOL), which produces plastics for household appliances, auto parts and other uses. The company recently announced a multi-year deal to supply polypropylene catalysts to Borealis AG, a leading chemicals provider. The capacity expansion at W.R. Grace's manufacturing plant at Worms, Germany, is expected to be completed by mid-2011. W.R. Grace competes directly with Albemarle Corp. (ALB) and other players.



Oregon-based Synthetech is a fine chemicals producer with specialization in organic synthesis and biocatalysis technologies. The company manufactures specialty amino acids, amino acid derivatives, peptide fragments and other products for the pharmaceutical industry. It produces advanced pharma intermediates in compliance with the U.S. Food and Drug Administration (FDA) regulations.



Synthetech's offerings lend support to the production of therapeutic peptides and peptide-like small molecule drugs from the infancy of a client’s clinical development through market release and commercial production. The company’s offerings also enable the manufacture of chemical-based medical devices.