By Arijit Barman

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Rome: Dorf Ketal, one of the biggest global manufacturers and suppliers of specialty chemicals, is in advanced negotiations to buy Italmatch Chemicals SpA of Italy for $1.6 billion from current owners Bain Capital, said people in the know. Both sides have entered deal exclusivity talks and hope to finalise shareholder terms (SPA) in the next few weeks before a formal announcement is made at the month end, they said.The ambitious move, which will be the Mumbai-headquartered company’s biggest acquisition if successful, underscores the consolidation trend in the industry since last year. Abu Dhabi National Oil Co agreed to take over Germany’s Covestro AG in a €12 billion deal in 2024. Last October, Lone Star signed an agreement to sell specialty chemicals company AOC to Nippon Paint Holdings Co. Closer home, JSW Paints acquired a lion’s share of Akzo Nobel’s India business for $1.6 billion.Dorf Ketal (DK) was founded in 1992 by first-generation entrepreneurs and brothers Subodh and Sudhir Menon, who run the company. It’s a leader in the hydrocarbons chemicals value chain — oil and gas exploration, refining, petrochemicals and downstream retail fuel pumps — with a global portfolio and diverse applications across industrial segments.The company, which is privately held, posted a domestic revenue of Rs 5,479 crore in FY24. Revenue for the six months to September 2024 was Rs 2,961.3 crore.Dorf Katel vice chairman Subodh Menon and Bain Capital declined to comment. Mails sent to Italmatch did not generate a response till presstime.Live Events STRATEGIC RATIONALEThe Italmatch acquisition is aimed at diversifying into adjacencies and offering a wider range of products and services, said the people cited. Genoa-based Italmatch operates in four key business segments — water and oil treatment; lubricants, flame retardants and plastic additives; performance products; and personal care. The company led by chief executive officer Sergio Iorio has doubled down on specialty chemical additives used to produce flame retardants and fabric softeners as well as lubricants and water treatment. It has a strong presence in the US and operates 20 manufacturing plants globally, including nine in the EU. That would complement Dorf Katel’s worldwide footprint.In FY24, as per industry sources, Dorf Ketal had made a bid for Pune-based Aquapharm Chemicals, predominantly for its water treatment business, which is a key area for the Menons as well. The company was eventually acquired by Kolkata-based Phillips Carbon Black Ltd. (PCBL), part of the RP-Sanjiv Goenka Group.Dorf Ketal had been planning an IPO and even filed a DRHP but that was withdrawn last week on account of this transaction.Interestingly, the company’s CEO Iorio will be rolling over his stake to ensure management continuity.“Italmatch’s foray into the water segment is what is especially attractive for Dorf Katel. Chemicals used in water treatment in the ethanol industry or even oil and gas refining is a fast-growing segment that Dorf wants to capitalise on,” said an executive in the know. “DK has grown inorganically and its ambitions too have been rising as it has been successful in integrating their global buys.”Since 2003, DK has made at least a dozen acquisitions, buying units and divisions from companies as diverse as ExxonMobil, UOP, Clariant’s North American land oil business to local firm Khyati Chemicals and Pune-based Elixir Soltech. Most of its R&D, product knowhow and IP has been acquired through M&As, posing an entry barrier for competitors. In 2022, it expanded to Latin America, one of the largest oil-producing regions in the world and the fastest-growing in pulp, with strong potential for developing sustainable chemistries derived from plant-based sources like ethanol, soy and other crops.The Italian company too has gone through several rounds of private equity ownership. Bain Capital acquired control of Italmatch from Ardian SAS in 2018. Subsequently, it sold a minority stake in Italmatch to Saudi Arabian Industrial Investments Co, also known as Dussur. Under Bain, Italmatch has expanded through organic growth and bolt-on deals. It signed a binding agreement in 2024 to purchase a majority stake in Brazilian rival Alcolina, which specialises in water treatment for bioethanol, sugar production and industrial applications. The US buyout fund has also helped the company to double earnings before interest, taxes, depreciation and amortisation (ebitda). FY24 revenue touched €686 million with sales volumes rising 8% from the previous year. Adjusted ebitda rose 17% from € 115 million to €134 million, as per a July 2025 announcement, while contribution margin grew 10%, reaching € 276 million versus €251 million in the previous year. It also has €690 million of outstanding bonds, according to data compiled by Bloomberg.India to Italy: Perfect SynergiesItalmatch has historically grown through M&As and has made several acquisitions in the water additives and lube additives space. The business has managed to maintain a 20-21% ebitda margin profile despite a challenging business environment in chemicals globally, said the industry executive cited above. One of Dorf Ketal’s biggest strengths has been the R&D and product knowhow – majority of the IP has been acquired through their M&As (Fluid Energy, UOP Inc, DuPont and Johnson Mathey) and has acted as big entry barrier for competitors. The Menons have also been savvy buyer of oilfield and specialty chemical businesses around the world and has generally known to be a value buyers. Morgan Stanley is advising Dorf Ketal as well as solely underwriting the entire financing.One of the obvious synergies for Dorf Ketal would be to move some of the EU-based manufacturing and rationalise the sites. Over the years, it has become a ‘wells to wheels’ company, delivering solutions across every stage of the value chain, from extraction to end-use.Its plants are located in India, Brazil and Canada in addition to contract manufacturing capabilities in the Netherlands. It’s R&D units are in India, Brazil, Singapore and Canada, with several marketing offices across the world. “Global speciality chemical deals of a certain critical size (> $100 mn EBITDA) have been priced in the 10-14 (x) EV / EBITDA range,” said Navroz Mahudawala, founder Candle Patners, an advisory firm. “However considering the current ongoing challenges in the chemical sector esp in Europe a buyer may get better pricing compared to traditional historical multiples and most sellers may be more realistic in terms of valuations. The ongoing year (CY 2025), has been challenging for most companies across various segments and we definitely will see a decline in EBITDA margins for most speciality chemicals companies.” The market for global specialty chemicals has increased from $1.03 trillion in 2021 to $1.14 trillion in 2023 and is estimated to further go up to $1.43 trillion in 2028 owing to an increase in demand from end-use industries such as automotive, construction, electronics, pharmaceuticals and food and beverages. Europe is a significant market for specialty chemicals.Add as a Reliable and Trusted News Source Add Now!
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