Acquisition of Kel-Tech Inc.

On 1 October 2016 Clariant acquired from Arsenal Capital Partners 100% of the shares of Kel-Tech Inc. for a total consideration of CHF 224 million, out of which CHF 203 million were paid in 2016 and CHF 21 million are considered as contingent consideration. If certain sales goals are met in 2017, an earn-out up to a maximum of CHF 35 million will become payable in 2018. The acquired company is based in Midland, Texas, USA and is a manufacturer and supplier of specialty chemicals for production, field stimulation and drilling applications in the oil-service business throughout onshore United States. This acquisition pertains to the Business Unit Oil & Mining Services. Since its acquisition, Kel-Tech Inc. is fully consolidated in Clariant’s financial statements. The summary of the financial impact of consolidating Kel-Tech Inc. in the accounts at the acquisition date, using the provisional fair values of identified assets and liabilities is as reported below. The acquired intangible assets comprise mainly customer relationships, developed technology, know-how and the trade name. As some of the allocated values are still under assessment, this overview should be considered as preliminary.

For this acquisition, costs of CHF 2 million, comprising M&A, legal costs, tax advisory and consulting charges, were recognized in »Selling, general and administrative costs« in the year 2016.

From the acquisition date up to the end of the year 2016, Kel-Tech Inc. reported net sales of CHF 20 million and a breakeven operating result including CHF 2 million of depreciation and amortization. This result includes the above-mentioned items of a one-time nature which were incurred in connection with the takeover by Clariant. If the acquisition had occurred on 1 January 2016, Group sales would have been CHF 59 million higher and the operating result would have been CHF 5 million higher.

Acquisition of X-Chem LLC

On 1 October 2016 Clariant acquired from NCH Corporation the activities of X-Chem LLC in a combined asset and share deal for a total consideration of CHF 140 million. The acquired company is based in Irving, Texas, USA and is a provider of specialty oilfield chemicals for the production, completion and stimulation of oil wells, gas wells and pipelines focused on land and offshore United States. This acquisition pertains to the Business Unit Oil & Mining Services.

Since its acquisition, X-Chem LLC is fully consolidated in Clariant’s financial statements. The summary of the financial impact of consolidating X-Chem LLC in the accounts at the acquisition date, using the provisional fair values of identified assets and liabilities is as reported below. The acquired intangible assets comprise mainly customer relationships, developed technology, know-how and the trade name. As some of the allocated values are still under assessment, this overview should be considered as preliminary.

For this acquisition costs of CHF 3 million, comprising M&A, legal costs, tax advisory and consulting charges, were recognized in »Selling, general and administrative costs« in the year 2016.

From the acquisition date up to the end of the year 2016, X-Chem LLC reported net sales of CHF 20 million and a breakeven operating result including CHF 2 million of depreciation and amortization. This result includes the above-mentioned items of a one-time nature which were incurred in connection with the takeover by Clariant. If the acquisition had occurred on 1 January 2016, Group sales would have been CHF 64 million higher and the operating result would have remained at the same level.

The goodwill arising from the acquisition of Kel-Tech Inc. and X-Chem LLC is attributable to a number of factors such as future growth potential in line with historical levels, significant cost synergies and the acquired workforce.

Acquisition of Vivimed personal care portfolio

On 8 January 2016 Clariant acquired the specialty chemicals segment of Vivimed Labs Ltd, India. This acquisition complements Clariant’s personal care portfolio in India with actives to formulate broader solutions within the sun, skin, hair and oral care range as well as antimicrobial preservatives. It will expand Clariant footprint in the region of the Business Unit Industrial & Consumer Specialties (ICS) .

Since its acquisition by Clariant India Ltd, the acquired business is fully consolidated in its financial statements. The summary of the financial impact at the acquisition date on Clariant consolidated accounts, using the fair values of identified assets and liabilities, is as reported below. The intangible assets acquired consist of customer relationships, technical know-how and in-process research and development projects.

For this acquisition costs of CHF 0.5 million, comprising M&A and consulting charges, were recognized in »Selling, general and administrative costs« in the year 2016.

The goodwill resulting from this acquisition is attributable to a number of factors such as future growth potential, cost synergies and the acquired workforce.

Acquisition of the remaining shares in the Consortium with Carboflex

On 13 June 2016 Clariant acquired the Carboflex 50% stake in the consortium that built and operates a plant in Rio de Janeiro in Brazil. The facility produces chemicals used in oil and gas wells. The purchase price for the remaining 50% shares totals CHF 11 million, out of which CHF 8 million were paid in June 2016 and the remaining CHF 3 million are held back for potential indemnifications by Clariant on behalf of Carboflex. The assets acquired mainly consist of customer relationships and property, plant and equipment.

The transaction was treated as a two-step acquisition. The 50% shares already held were remeasured to fair value, which led to an income of CHF 7 million, recognized in Income from associates and joint ventures. No material goodwill arose on the acquisition. This acquisition pertains to the Business Unit Oil & Mining Services.

Acquisition of SQE Olivene S.r.l.

On 1 March 2016 Clariant acquired 100% of the shares of SQE Olivene S.r.l., Italy from a private owner. The company specializes in the manufacture of squalenes and squalanes used in the cosmetics industry. The purchase price amounted to CHF 3 million. The assets acquired mainly consist of intangibles (customer lists, tradenames and a non-compete clause) and inventories. The generated goodwill amounts to CHF 1 million. This acquisition pertains to the Business Unit Industrial & Consumer Specialties (ICS).

Acquisition of the Mining Service Business of Flomin Inc.

On 31 October 2016 Clariant purchased from Flomin Inc., Delaware, USA, the Mining Service activities consisting of customer relationships, developed technology and inventories. The business consists of the manufacture and sale of specialty reagents including collectors, frothers and solvent extractants for the global mining industry. The purchase price amounted to CHF 11 million and resulted in a goodwill of CHF 5 million. This acquisition pertains to the Business Unit Oil & Mining Services.

Acquisition of Chemical & Mining Services Pty Ltd

On 1 November 2016 Clariant purchased 100% of the shares of Chemical & Mining Services Pty Ltd, Australia, from private investors. The company is a supplier of flotation reagents and technical services relating to base and precious metals flotation to the mineral processing industry. The purchase price totals CHF 5 million out of which CHF 3 million were paid in 2016 and the remaining CHF 2 million represent a contingent consideration that will be due if certain sales targets are met in 2017 and 2018. The purchase price allocation is still in progress and should be finalized in the first quarter of 2017. No goodwill is expected to arise from this acquisition. This acquisition pertains to the Business Unit Oil & Mining Services.

Acquisition of remaining shares of Companhia Brasileira de Bentonita

On 1 July 2015 Clariant acquired the remaining 50% shares of Companhia Brasileira de Bentonita (CBB) from the Brazilian-based company Geosol. This transaction was treated as a two-step acquisition and therefore, according to IFRS 3, the 50% shares already held were remeasured to fair value which resulted in a CHF 4 million gain recorded as income from associates and joint ventures in the income statement.

The acquisition of the remaining 50% shares for an amount of CHF 5 million paid in cash resulted in a gain on a bargain purchase in the amount of CHF 3 million, mainly from a remeasurement of mining rights, which was recognized in the income statement. This acquisition pertains to the Business Unit Functional Minerals.

Acquisition of the de-icing activities from Kilfrost Ltd

On 30 September 2015 Clariant acquired from the British-based Kilfrost Ltd the de-icing activities in the United States, China and Korea, consisting mainly of customer relationships, know-how and inventories. Total consideration paid was CHF 10 million and the goodwill amounts to CHF 3 million. This acquisition pertains to the Business Unit Industrial & Consumer Specialties (ICS).

Various smaller acquisitions were made in 2015 totalling a purchase price of CHF 7 million and generating a goodwill of CHF 1 million.