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Changing hydraulic oil. Courtesy of Barksdale Airforce Base
(U.S. Air Force photo/Tech Sgt. Marie Brown)

Quaker Chemical to Merge with Houghton International

The merge will serve to reduce Houghton International’s debt by combining resources and building a broader product portfolio of specialized fluids for hydraulic systems and metalworking.

Quaker Chemical Corp. and Houghton International Inc.—two companies specializing in specialty fluids for metal and metalworking, and hydraulic oils and lubrication—have reached a definitive agreement to merge, combining global operations in more than 30 countries to serve customers in heavy equipment, mining, machinery, marine, offshore, and container industries.

The partnership is expected to result in a broadened product offering of custom hydraulic oils and lubrication from Houghton along with specialty fire-resistant hydraulic fluids from Quaker Chemical for safety at higher operating pressures. The partnership is also expected to generate an expansive metalworking platform comprising of removal fluids, forming fluids, protecting fluids, heat treating fluids, industrial lubricants, and greases.

The partnership will also diversify the companies’ commitment to R&D, accelerating product development and time to market through a more diverse R&D pipeline. It will enrich the chemical management team with more industry-expert associates and applications experts.

“In addition to our complementary businesses,” says Mike Shannon, CEO of Houghton International, “we are each committed to creating solutions for our customers through innovation, strong technical expertise, and global reach with localized applications expertise.”

The companies aim to combine their resources and optimize their service pipelines to resolve Houghton’s debt, which nears $690 million. They predict cost synergies—or reductions in operational costs—to be $45 million over the first two years of the merge. Under the terms of the agreement, Houghton International shareholders will receive 24.5% ownership of the combined company, representing approximately 4.3 million shares of newly issued Quaker Chemical stock.

Backed by $10 billion in investments from banks, the resulting company will remain a publicly traded company on the New York Stock market. The transaction is expected to be completed by the end of 2017 or early 2018. The companies will continue to operate independently until then.

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