Cabot to acquire fully Grupo Kuo carbon black joint venture

Cabot Corporation has announced a new agreement with Grupo Kuo SAB de CV to purchase its remaining 60 per cent equity in the companies’ Mexican carbon black manufacturing joint venture, Nhumo, SA de CV. Cabot will pay $105 million for Kuo’s current shareholding, of which $80 million will be paid upon closing, excluding cash acquired. Cabot says Nhumo’s position as a leading carbon black producer in Mexico will help to strengthen its global carbon black business, and help to meet what it says is a growing demand for carbon black throughout North America. Following the announcement Cabot shares increased 2.9 per cent, and the company said it expected an earnings boost of around $0.15 per share as a result of the acquisition in the 2014 financial year. Extending into the next three years, Cabot estimates that operational synergies could increase earnings per share by $0.05 to $0.10.

Cabot characterises the acquisition not only in terms of the increased size of its North American footprint. Cabot president and chief executive officer, Patrick Prevost said that the move “solidifies our global leadership position in the carbon black industry.” It will expand its access to the growing Mexican market, while upping the available capacity to the US. Prevost also said the acquisition “demonstrates our ongoing commitment to delivering high quality products and services from local supply sources”.

Cabot now has 18 plants around the world, with a carbon black capacity in excess of two million tons. 

The Altamira-based Nhumo plant, in which Cabot has owned approximately a 40 per cent share since 1990, has an annual capacity of 140,000 metric tons, generating an adjusted EBITDA of $41 million in the 2012 fiscal year. Cabot expects to complete the acquisition by autumn 2013, pending regulatory approvals.

“We are excited to bring this plant, and the Nhumo team, fully into the Cabot network,” said president of the Reinforcement Materials segment, Dave Miller. “Auto and tyre manufacturers have been increasing capacity in the US and Mexico, which is driving demand for our high performance rubber black products. Through this acquisition, we will be well positioned to support the growing demands of our North American customers.”

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