Full consolidation of Süd-Chemie India Ltd. (SCIL)

As of 1 April 2017 Clariant fully consolidated the company SCIL, which was until that time accounted for as a joint venture and as such was valued at equity. Clariant’s share in SCIL is 50%, while the other 50% are owned by private investors in India.

In view of SCIL’s significance for Clariant’s Catalysis activities in Asia, management successfully renegotiated the joint venture contracts. The new terms introduced a casting vote for Clariant to direct the relevant activities. The contractual change and the 50% voting rights resulted in Clariant obtaining control over SCIL. As no consideration was paid, nor any shares were purchased or sold, this transaction is treated as an acquisition without consideration. Prior to the full consolidation Clariant already owned 50% of SCIL. In a first step this participation was revalued to fair value resulting in an income of CHF 10 million recognized in »Income from associates and joint ventures« in the income statement.

In a second step assets and liabilities of the company as per 1 April 2017 were included in the balance sheet, while the participation in the joint venture was derecognized. The co-owners’ share in SCIL is recognized in non-controlling interests. Goodwill, included in non-current assets, amounted to CHF 63 million.

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 223 million, out of which CHF 202 million were paid in 2016 and CHF 21 million were considered as contingent consideration.

As the sales goals that would have triggered an earn-out up to a maximum of CHF 35 million were not met in 2017 the respective provision in the amount of CHF 21 million was reversed in the line Sales, General & Administration in the income statement in 2017.

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.

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.

In 2017, the provisional fair values of the acquired net assets of X-Chem LLC were adjusted within the measurement period following the acquisition. As a result goodwill increased by CHF 8 million to CHF 22 million compared to CHF 14 million at the acquisition date, mainly as a correction of the value of inventories and property, plant and equipment taken over.