New study shows Henkel consolidating global adhesive industry

German-based chemical and cosmetic group Henkel already the world's leading producer of adhesives has recently extended its grip on this US$21-23 billion industry via its recent US$400 million purchase of Dexter's Specialty Polymers business through its US subsidiary Loctite.

This deal according to World Adhesives File 2000-2005 a recent report published on the global adhesive industry by Market Tracking International (MTI) will see Henkel increase its market share of the world adhesive industry from 12% to 14%. A combined Loctite (Henkel)/Dexter operation will now have a dominant position in the fast growing electronic adhesive market, which is currently experiencing double-digit growth.

This transaction is the latest, in a series of deals that has seen the global adhesive industry consolidate with increasing speed over the last 18 months. Other major deals have seen TotalFina's US$500 million Bostik adhesive business merge with Elf's US$600 million Ato Findley unit to form Atofina. Another recent chemical merger, which has directly impacted the adhesive industry, is the link-up between Rohm and Haas and Morton International. This deal has combined Rohm and Haas's US$200 million acrylic adhesive business with Morton's bigger adhesive operations worth more than twice this amount.

Moreover further deals of this kind are extremely to occur in the future, as the global adhesive industry, which has been ripe for consolidation for many years, is now set for a period of further consolidation. Major adhesive companies are now increasingly targeting specific fast growing market segments and chemistries, traditionally the haven for smaller suppliers, as margins and growth rates in the traditional large end-user markets for adhesives, packaging and construction, slowly disappear.

In particular, opportunities across the specialized adhesive markets, such as electronics, medical and some areas of the automotive industry are much in demand. Growth in these markets are being driven by strong end-user demand and new product developments, that mean adhesive compounds can now increasingly be used as direct replacements for mechanical fasteners. Another area currently experiencing high growth is the pressure-sensitive adhesive label market, where the explosive growth in retail shopping over the Internet has led to greater use of pressure-sensitive materials such as labels and bar codes.

According to World Adhesive File 2000-2005, the leading handful of adhesive suppliers, including pressure-sensitive companies, already controlled almost half the global market in 1999. Henkel leads the way with an estimated 12% global market share, which will probably increase to around 14% with the purchase of Dexter's adhesive interests. Pressure-sensitive suppliers 3M and Avery Dennison are ranked second and third, with 9% and 7% shares respectively, followed jointly by National Starch and HB Fuller both on 6%. The newly enlarged Atofina and Rohm and Haas follow closely behind.

World Adhesives File 2000-2005 is available at a cost of £1,200 from: Market Tracking International Ltd, 6 Archway Business Centre, Wedmore Street, London N19 4RU. UK (tel: +44 (0)20 7263 1365 fax: +44 (0)20 7272 8525).

For further information contact Jamie Talmage, Market Analyst, MTI on Tel: + 44 (0)20 7263 1365

Edited by Mark Drukenbrod
Managing Editor, Adhesives and Sealants Online