Hercules sheds shares in CP Kelco

- Last updated on GMT

Related tags: Cp kelco, Cellulose

In a surprise move US chemical company Hercules is to sell its
three-year old stake in hydrocolloid leader CP Kelco to emerging
CMC player Huber, sparking speculation as to when Huber might take
full control of CP Kelco.

Founded in September 2000 from Hercules' Food Gums division and the Kelco Biopolymers division of Monsanto Pharmacia, CP Kelco is 71.43 per cent owned by investment group Lehmann Brothers and 28.57 per cent by Hercules.

Industry spectators had anticipated that Hercules would in time opt to take full control of CP Kelco - a leading producer of xanthan gum, pectin and carrageenan - with the investment group selling its stake on the crest of the wave. The announcement this week has changed the picture.

'Following the Hercules' divestment, there is now speculation as to when Huber might acquire the remaining slice of CP Kelco,'​ hydrocolloid specialist Dennis Seisun​ told FoodNavigator.com.

The acquisition of the Hercules' stake is a clear sign that the US chemicals group Huber is keen to build on its hydrocolloid business, boosted dramatically in 2001 with the acquisition of Finnish company Noviant, the world's biggest producer of carboxymethylcellulose (CMC) with a 30 per cent slice of the world market.

Sourced from cellulose fibre (wood pulp, cotton linters) CMC products are supplied in three grades: high-purity, also known as cellulose gum, 99.5 percent minimum, is used by the food industry in a wide variety of applications including ice cream, yoghurt and bakery products.

In a bid to reassure customers that it is business as usual, Robert Toth, CEO of CP Kelco commented yesterday :"In terms of our day-to-day operations, this announcement and resulting sale of Hercules' minority share position will have virtually no impact on us and will be completely transparent to our customers, suppliers and employees."

But this recent decision from Hercules has left the industry speculating, principally fired by its recent bolt on acquisition last month of Quantum Hi-Tech, a Chinese CMC producer. Divesting in the US by selling shares in CP Kelco, to invest in the fastest growing market for cellulose ethers in the world, China, is clearly one explanation.

"The acquisition fits well with Hercules' overall strategy to achieve growth through acquisitions that complement our products and expand our market positions,"​ said Craig Rogerson, chief operating officer of Hercules, citing the purchase as a platform for growth in the Asia-Pacific.

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