Elkem Acquires Chinese Silicone Elastomer & Resins Firm

Elkem ASA has entered into an agreement to acquire all of the shares in Polysil, a Chinese silicone elastomer & resins material manufacturer with strong positions in baby care and food grade silicones, as well as silicone products for the electronics and medical markets. Polysil and Elkem’s complementary product and market positions provide a solid platform for further specialization and growth in China and globally. 
 
Polysil is a privately-owned company with more than 400 employees located in Zhongshan in Guangdong, China. The company has leading technology positions in production and development of Heat Cured Rubber (HCR), Liquid Silicone Rubber (LSR) and specialty resin and Pressure Sensitive Adhesives (PSA). Polysil has two production facilities and a research and development center with more than 50 scientists. 
 
In 2019, Polysil is estimated to generate a total operating revenue of RMB 612 million with an EBITDA of RMB 110 million. 
 
“We are continuing to deliver on our growth and specialization strategy. Acquiring Polysil will strengthen our position in selected specialized silicones segments in China. There are considerable synergies in leveraging Elkem’s upstream capabilities to supply raw materials and intermediates, and in combining both the product portfolio and the domestic and global market positions of Polysil and Elkem,” said Michael Koenig, CEO of Elkem.
 
Approximately 90 percent of Polysil’s revenues are generated in China, primarily in South China. Elkem’s presence and positions in other parts of China and internationally provide a solid platform for Polysil’s products and further growth. 
 
“Polysil is very pleased to become part of the Elkem group and looks forward to working closely with Elkem in achieving common goals. Elkem’s products, knowledge and brand complement the Polysil product range and will benefit Polysil customers going forward,” said Hanxi Ma, the largest shareholder of Polysil.
 
“Polysil’s products and market positions in food, baby care, electronics, and medical markets are complementary to Elkem. Polysil has particularly strong positions in the fast-growing South China market where approximately half of all Chinese silicone rubber consumption is. There is significant potential in utilising Polysil’s high-end liquid silicones rubber and pressure sensitive adhesives specialty positions and in further developing both products and markets. Polysil’s strong research and development capabilities will be very important for development of products for both the Chinese market and globally,” said Frederic Jacquin, Senior Vice President Elkem Silicones.
 
Completion of the acquisition is subject to final regulatory approvals. Closing is expected by end of first quarter 2020.  
 
In connection with this transaction, Elkem was advised by Alantra, Wikborg Rein Advokatfirma AS, and EY, whilst the sellers were advised by Han Kun Law Offices.