DuPont 'Abandoned' the Two Major Production Bases in the United States!

Huafon acquires DuPont biobased business

On June 1, 2022, Beijing time, Huafon Group's acquisition of the bio-based product-related business and technology spun off from DuPont in the United States officially completed the delivery. This is the largest overseas merger and acquisition transaction of Huafon Group so far, with an amount of up to 240 million US dollars, and the sales of the target business in 2021 will be 200 million US dollars.

Behind this cross-border merger is the specific implementation of Huafon Group's "14th Five-Year Plan" strategy to accelerate industrial internationalization and product environmental protection. "Under the global industrial competition, this overseas merger and acquisition is not only a strategic deployment for our company to allocate international resources, reconstruct the bio-based material industry chain and speed up the pace of international operation, but also a way for the company to enhance its competitiveness." Huafeng Group Chairman You Feiyu said.

Sorona production site in North Carolina, USA

The assets of Huafon Group's acquisition of DuPont's business mainly include its two production bases in the United States. One is a DuPont joint venture production base located in Tennessee, USA, with two world-renowned brands, Susterra® and Zemea®. Bio-based PDO with biodegradable properties.

Another production base acquired by the acquisition is DuPont’s Sorona® business core manufacturing plant in North Carolina, USA. The main product is an environmentally friendly fiber material bio-based special polyester (PTT ), such technology was first developed and commercialized by DuPont in 2000, and its application areas are mainly in the apparel and carpet industries, and other small-scale application markets also include automotive and packaging.

PDO production base in Tennessee, USA

According to reports, the bio-based PDO and PTT products acquired this time are in a leading position among the global counterparts in terms of technology and market share. PDO is the main raw material for the production of PTT, PTT can be processed into synthetic fibers and engineering plastics, and PTT is favored by industries such as clothing, carpets, electronics/electrical, automobiles, appliances and furniture due to its excellent characteristics, and its current market share continues to grow. Improvement, the future market space has broad prospects.

New company Covation Biomaterials established

Covation Biomaterials (Swissquote Biomaterials), a new company established by Huafon Group after the acquisition of DuPont's Biomaterials Division, was listed independently in Newark, Delaware, USA on June 1, becoming the world's leading provider of bio-based solutions business.

It is reported that in order to ensure the stable operation after the acquisition, Huafon Group has retained the management and technical core team of the acquired company, as well as the business, R&D and production bases in the United States. At the same time, Huafon Group stated that it will invest more resources, seek more partners and a broader application market, help the newly acquired company develop faster and consolidate its position as a cutting-edge supplier of bio-based materials.

Covation Biomaterials has an extensive product line to bring bio-based solutions to market. The product lines that will continue to be launched in the market after independence include:

Sorona, a partially bio-sourced polymer, caters to the global demand for sustainable fabrics and carpets and connects individuals and societies at a critical time in our ecological stewardship.

As a leading bio-based polymer, 37% of Sorona®'s raw material comes from plants that are recycled every year. What's more worth mentioning is that it has excellent environmental protection characteristics. Sorona® consumes 30% less energy and emits 63% less greenhouse gas than the nylon 6 production process. Sorona® consumes 40% less energy and emits 56% less greenhouse gas than the nylon 6,6 production process. Sorona is ideal for stylish, functional clothing, as well as soft and durable carpets;

Susterra, a 100% plant-based high-performance base material, reduces the need for petroleum-based ingredients while enhancing the properties of the final product. Its applications range from footwear, outdoor clothing, to coatings, inks and functional fluids;

Zemea, a plant-based biodegradable material, helps brands meet their sustainability goals without compromising product quality or performance. Zemea can be used in a variety of formulations to meet the exacting standards of a variety of high-demand markets, from personal care and home care, to pharmaceuticals, flavor enhancers and food.

Why did Huafon go to great lengths to choose overseas mergers and acquisitions?

"Under the 'two-carbon' goal, the main driving force for our overseas mergers and acquisitions is to build a green industrial chain, product chain and upgrade value chain, enhance the synergy of Huafon's existing industries, and accelerate the transformation and upgrading of green new technologies and industries." You Feifeng, Vice President of Huafon Group and Chairman of the Board of Covation Biomaterials (a new company established after the acquisition), said that Huafon Industries is currently in the process of going abroad. Strategically, the target products of this acquisition are all Originating from bio-based, it is not only highly compatible with our industrial strategy and product strategic orientation, but also can replace some of our existing raw materials to produce environmentally friendly polyurethane products and promote the scale of sustainable materials.

It is reported that in order to ensure the stability of operations after the acquisition, Huafon Group has retained the management and technical core team of the acquired company, as well as the business, R&D and production bases in the United States. Huafon Group hopes that the integration of a large number of international talents can bring more advanced management concepts, more professional ways of doing things and a more global perspective to the enterprise.

"In the future, we will invest more resources to access a wider range of value chain partners and applications to help newly acquired companies develop faster, so as to consolidate their position as a cutting-edge supplier of bio-based materials." You Feiyu said.

What does DuPont want to do with frequent sales of core businesses?

For Huafon, the intention of this acquisition is well understood: to integrate the market, allocate global resources, and create a new competitive advantage with bio-based materials under the dual-carbon goal.

More importantly, by splitting the business here, it can more effectively get rid of its dependence on oil resources. But on the other side, for DuPont, the reasons are more complicated.

The broad prospects of bio-based materials are obvious to all. Although the current market is not mature, it is bound to become the future development direction. DuPont sought to sell the business in May 2019, and it took 17 months to reach a deal with Huafeng. The market share of this business has been growing, which makes one wonder: Why did DuPont give up a piece of "good meat"?

In fact, combined with other acquisition cases, we may be able to get a glimpse. In February, DuPont sold its transportation and materials business to Celanese for $11 billion.

You know, this is one of DuPont's trump cards. The sale list includes well-known grades of materials such as Zytel®, Crastin®, Rynite®, Delrin®, Hytrel®, and these brands will have a combined revenue of approximately $4.2 billion in 2021.

Before that, in 2021, DuPont acquired Laird High Performance Materials and Rogers, a composite materials supplier, for $5.2 billion.

DuPont CEO and Chairman Ed Breen also revealed in a press release that continued strong demand for electronics and water treatment products, as well as DuPont's ability to offset raw material inflation through price, was "critical" to Q4 performance.

These layouts are obviously aimed at "concentrating on doing big things" - electronic products, water treatment and other high-growth business points.

Since the beginning of the epidemic in 2020, to the cold wave in the United States, to my country's production and power restrictions, to the current Russian-Ukrainian conflict, the black swan event is like Pandora's box, once it is opened, it does not seem to stop.

In today's global integration, the chemical industry has undoubtedly suffered a huge impact, which is also the main driving factor for companies to constantly look for new opportunities and new growth points.

It is not difficult to find from the various merger and acquisition cases in the chemical industry in the past two years that companies headed by giants such as DuPont, BASF, Lanxess, Celanese, and SABIC are undergoing a major reshuffle of the chemical industry.

Mergers and acquisitions of high-growth businesses, divestitures of high-cost and low-output departments, seeking out new fields, and even organic cooperation with competitors are believed to be the development pattern in the long-term in the future, and there will be more such acquisitions.