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Arkema: The Specialty Materials Transformation
How an Unwanted Chemical Spin-Off Engineered One of the Most Successful Corporate Reinventions in Industrial History
In the spring of 2006, a peculiar thing happened on the Paris stock exchange. A company that nobody particularly wanted—a grab-bag of commodity chemicals that Europe's fourth-largest oil company had deemed unworthy of its balance sheet—debuted as an independent entity. The company was called Arkema, a name invented by marketing consultants that cleverly embedded "kem" (chemistry) into something that sounded vaguely aspirational. The occasion was not exactly a celebration.
Total, Elf Aquitaine and Arkema were investigated by the EU Commission for involvement in an illegal supply, sales and pricing cartel in the hydrogen peroxide and sodium perborate markets. The Commission found that Arkema's predecessor companies Atochem and Atofina committed the infractions between May 1995 and December 2000. Arkema was fined €78 million in May 2006 for breaching EU antitrust law—literally at the same moment the company was going public. An auspicious start, indeed.
The man charged with making something out of this unwanted portfolio was Thierry Le Hénaff, a 43-year-old engineer who had spent his career in the adhesives business. He faced a daunting challenge: transform a cyclical commodity chemical operation into something that could survive—let alone thrive—outside the protective umbrella of an oil major. "Arkema's Thierry Le Henaff is engineering one of the most ambitious transformations in the chemical industry through M&A and innovation, positioning the company as a leader in higher margin and growth specialty chemicals and materials."
Nineteen years later, the transformation is essentially complete. Turnover in 2024 was €9.5 billion. Arkema operates in 55 countries and has 21,150 employees, 17 research centers and 157 production plants. The company that debuted with a €78 million antitrust fine has evolved into a global specialty materials leader, with products inside everything from electric vehicle batteries to smartphones to aircraft interiors. Le Hénaff's tenure at the helm—nearly two decades of consistent strategic execution—represents one of the most remarkable corporate transformations in European industrial history.
This is the story of how an unwanted spin-off became a specialty materials powerhouse—and what it reveals about strategic patience, portfolio transformation, and the art of knowing when to buy, when to build, and when to walk away.
I. The Deep Roots: French Chemical Industry Heritage (1971–2004)
To understand Arkema's origin story, you have to understand why European oil majors accumulated chemical businesses in the first place—and why they eventually couldn't wait to be rid of them.
Arkema was created when French oil major Total restructured its chemicals business in 2004, but the company's roots go back many years. In 1971, Elf and Total merged their chemical operations into Aquitaine Total Organico (ATO), a joint subsidiary. This was the era when oil companies believed vertical integration was destiny—that controlling everything from the wellhead to the gas pump to the plastic packaging made strategic sense.
The French chemical industry's evolution through the 1970s and 1980s resembled a game of industrial musical chairs. The joint venture was renamed ATO Chimie in 1973. A second company, Chloé Chimie (40% Elf Aquitaine, 40% Total and 20% Rhône-Poulenc) was formed in 1980 to take over Rhône-Poulenc's chlorochemicals business. Assets moved between companies based on government industrial policy, personal relationships between executives, and the prevailing belief that bigger was always better.
Three years later, Total sold its stake in Chloé Chimie to Elf and chemical production in France was reorganized around Atochem, a wholly owned Elf Aquitaine subsidiary that incorporated the activities of ATO Chimie, Chloé Chimie and most of PCUK. In 1989, Elf Aquitaine acquired the American Pennwalt Corporation and along with M&T Chemicals and Atochem Inc formed Atochem North America Inc.
The Pennwalt acquisition proved enormously consequential for Arkema's future. Pennsalt enters the plastics field with the development of Kynar® polyvinylidene fluoride (PVDF) resin. This technology, developed in the early 1960s at the company's Calvert City, Kentucky facility, would eventually become the foundation of Arkema's battery materials business—though nobody could have imagined that future at the time. Arkema previously increased production in Calvert City by 20% in 2018. Arkema's Calvert City plant has a long history in PVDF manufacturing.
The consolidation continued through the 1990s and culminated in one of the largest European mergers of the era. TotalFina and Elf Aquitaine reorganize to form TotalFinaElf, the world's fourth-largest oil company. The chemical operations combine to create Atofina, and Elf Atochem North America becomes Atofina Chemicals, Inc.
Consolidation in the oil and gas industry has led to some unintended results: Similar, and sometimes dissimilar, chemical operations have found themselves merged into new, unexpected wholes. Atofina, the combination of three nearly equal-sized businesses—Total's chemical business, Fina's petrochemical operations, and Elf Aquitaine's Atochem unit—is no exception. Now, about a year after the parent oil companies joined together, executives in the chemical subsidiary say it will remain part of the integrated TotalFinaElf.
But that commitment wouldn't last. By the early 2000s, the economics of chemicals had shifted dramatically. Asian competitors were coming online with lower cost structures. The commodity cycle showed no signs of moderating. And oil company executives were discovering what their peers at Shell and BP already knew: chemicals simply didn't generate returns comparable to oil and gas exploration. Capital that could be deployed finding new reserves was instead tied up in PVC plants and acrylic facilities that earned single-digit returns in good years and lost money in bad ones.
The strategic imperative to exit chemicals had become unavoidable. The question was how.
II. The Spin-Off: Birth of Arkema (2004–2006)
The Decision to Spin
In February 2004, Total, the French-based multinational oil conglomerate announced a reorganisation of its chemicals business. A new company under Total's ownership, named Arkema, was formed on 1 October into which Total placed certain assets held by its Atofina subsidiary, which was then dissolved.
The decision to spin off rather than sell piecemeal represented a significant strategic pivot. Total initially pursued the same approach its peers had taken—identifying assets to divest individually and finding buyers willing to pay reasonable prices. But the chemical assets proved difficult to sell in pieces. The integrated nature of the operations meant that separating individual business lines created stranded costs and orphaned facilities.
The solution emerged from within the organization itself. The kem part of Arkema's name references the company as a chemicals producer. Arkema was structured into three divisions producing vinyl products (chlorochemicals and PVC, vinyl compounds and pipes and profiles), industrial chemicals (acrylics, fluorochemicals, hydrogen peroxide, PMMA and thiochemicals) and performance products (additives, organic peroxides, agrochemicals and urea-formaldehyde resins).
The Dangerous Template: Failed Chemical Spin-Offs
The chemical industry's track record with spin-offs was, to put it mildly, discouraging. Rhodia, spun off from RhĂ´ne-Poulenc in 1998, had lurched from crisis to crisis, its stock down 95% from its IPO price by 2003. Solutia, spun from Monsanto in 1997 with legacy liabilities from PCB contamination, would eventually file for bankruptcy in 2003. Celanese, after years of ownership changes, struggled to find stable footing.
The pattern was clear: companies spun from larger parents often lacked the scale, the management depth, and the financial flexibility to navigate the commodity cycle successfully. They inherited cost structures built for integration with oil refining operations that no longer existed. They faced capital markets skeptical of cyclical chemical businesses. And they often carried legacy environmental and legal liabilities that their former parents were eager to shed.
Le Hénaff understood these risks intimately. His challenge was to find a different path—to use the spin-off as a launching point rather than a slow death sentence.
Thierry Le HĂ©naff: The Architect
Thierry Le Hénaff, born in 1963, holds degrees from École Polytechnique and École Nationale des Ponts et Chaussées and a Master's degree in Industrial Engineering and Engineering Management from Stanford University in the United States. He is a Chevalier de l'Ordre National du Mérite, as well as a Chevalier dans l'Ordre National de la Légion d'Honneur. He is Senior Independent Member of the Supervisory Board of Michelin Group and also member of the Board of Fondation de l'Ecole Polytechnique.
Le Hénaff's background was unusual for a chemical company CEO. Rather than rising through operations or finance, he had built his career in adhesives—a specialty business that required deep customer relationships and technical collaboration. After starting his career with Peat Marwick Consultants, he joined in 1992 Bostik, Total's Adhesives Division, where he held a number of operational positions in France and worldwide. In July 2001, he was appointed Chairman and Chief Executive Officer of Bostik Findley, the new entity resulting from the merger of Total's and Elf Atochem's Adhesives divisions.
On January 2003, he joined Atofina's Executive Committee and then Total's Management Committee in 2004. He has been Chairman and Chief Executive Officer of Arkema since the initial public offering of the company in 2006.
The Bostik experience proved formative. Le Hénaff had witnessed firsthand how a specialty chemicals business operated differently from commodities—how customer relationships mattered, how innovation created defensible positions, how pricing power came from solving problems rather than selling molecules. This perspective would shape every major decision he made at Arkema.
Thierry Le Henaff has been chairman and CEO of Arkema since the company's stock market listing in 2006 when it was spun off from Total. "It is a great honor to receive this prestigious award. It is all the more invaluable for me as it reflects the choice of my peers, the CEOs of other chemical groups around the world." "I share it with the Arkema teams. This award is first and foremost theirs. Through their unwavering commitment, professionalism and spirit of conquest, they have enabled Arkema's transformation towards specialty materials. This award recognizes our strategy focused on innovative and high-performance materials that help deliver solutions developed with and by our customers for a more sustainable world."
The IPO
Total's intention to spin off Arkema into an independent listed company was achieved on 18 May 2006 when Arkema debuted on the Paris stock market.
Arkema shares are listed on Euronext Paris since May 18, 2006. ISIN: FR0010313833 Mnemonic: AKE.
The structure of the spin-off reflected Total's determination to separate completely from its chemical assets. Total shareholders received one Arkema share for every ten Total shares held—a clean distribution that would leave no ongoing ownership ties between parent and offspring. Arkema was on its own.
The timing was suboptimal. The €78 million antitrust fine announced simultaneously with the IPO cast a shadow over the debut. The chemical cycle was showing signs of rolling over. And the market remained skeptical of spin-offs given the track record of predecessors.
Highest end of day price: 153.98 EUR on 2022-01-17. Lowest end of day price: 12.05 EUR on 2009-03-02. That eventual low—€12 per share in March 2009, during the depths of the financial crisis—would represent the nadir from which one of the most successful corporate transformations in European industrial history would begin.
III. The Early Years: Survival and Strategic Clarity (2006–2011)
Establishing the Transformation Roadmap
Le HĂ©naff moved quickly to establish a strategic vision that differentiated Arkema from failed spin-offs. Rather than accepting the commodity chemical portfolio as given, he articulated an ambitious transformation agenda built on three pillars: innovation leadership, geographic expansion into Asia, and portfolio repositioning toward specialty chemicals through targeted acquisitions.
The cost cutting began immediately. The inherited cost structure reflected decades of integration with Total's broader operations. Redundant functions needed to be eliminated. Sites needed to be rationalized. The organization needed to learn how to operate as a standalone entity competing against pure-play chemical companies with leaner structures.
Early Portfolio Management
The divestitures began within months of independence. Assets that didn't fit the specialty strategy were sold to generate capital for reinvestment. The Group began acquiring specialty businesses, Since 2007, Arkema has been pursuing an ambitious targeted acquisition program enabling it to reposition itself strongly in specialty materials.
In June 2011, Arkema joined the CAC Next 20 French stock market index. This milestone—inclusion in France's second-tier equity index—signaled that investors were beginning to recognize the transformation underway. The stock had more than doubled from its IPO price, outperforming the broader French market despite the devastating 2008-2009 financial crisis.
Building Scale and Geographic Reach
The Asia expansion began in earnest during these early years. In Changshu, China, the Group has set up its largest global industrial platform in which it has invested 500 million euros in 10 years. 7 production units (organic peroxides, specialty polyamides, fluorogases HCFC-22 and HFC-125, PVDF fluoropolymers, and rheology additives).
Established in 1998, Arkema Changshu site covers 430,000 m2 and is Arkema Group's largest industrial platform worldwide, with around 860 employees and €500 million capex invested (since spinning off from TotalEnergies).
Located in the Jiangsu Province's Changshu Advanced Materials Industrial Park, Changshu Site integrates production, R&D, and a regional shared service center, with around €600 million capex invested. Since its construction in 1998, Changshu Site has been investing and upgrading, as well as encouraging talent development. It has approximately 1,000 employees and is today recognized across a number of high-growth potential areas, including lithium batteries, clean energy, more environmentally friendly coatings, building energy efficiency, sports and consumer electronics.
The Changshu investment represented a bet on Asia's growth that has been vindicated spectacularly. From a single fluorogas plant, the site has expanded to encompass seven production units, a major R&D center, and a regional headquarters. It has become the template for Arkema's approach to geographic expansion—not simply building factories in growth markets, but establishing integrated platforms capable of innovation, customer support, and production at scale.
IV. Inflection Point #1: The Vinyl Divestiture (2012)
The most defining decision in Arkema's transformation came in 2012, when Le Hénaff chose to exit commodity vinyl products—the largest business inherited from Total—under terms that shocked the market.
In July 2012, Arkema sold for 1 symbolic euro its vinyl products business segment to the Klesch group for reasons of profitability, but also to re-center its operations exclusively on specialty chemicals.
One euro. The headline was arresting enough. But the full terms revealed the depth of Le Hénaff's conviction that specialty chemicals represented Arkema's future—and his willingness to pay a significant price to escape the commodity treadmill.
In July 2012, Arkema sold for 1 symbolic euro its vinyl products business segment to the Klesch group for reasons of profitability, but also to re-center its operations exclusively on specialty chemicals. As part of this divestment, Arkema made a 100 million euro cash payment to the Klesch group and took on debts amounting to 470 million euros to help revive the activity.
Arkema didn't just give away its vinyl business—it paid €100 million cash and assumed €470 million in debt to make the sale happen. This was not an asset monetization but an asset exorcism. Le Hénaff was willing to pay nearly €600 million in total consideration to remove vinyl products from Arkema's portfolio permanently.
Arkema plans to sell its vinyl business to Switzerland-based investment group Klesch so it can focus on its industrial chemicals and performance products segments, the French chemical major said on Wednesday. Arkema said that its vinyl business is no longer profitable and that it will pay the Klesch Group €100m to take over the business. It will also book exceptional net expenses of around €470m for the project. The company said the project would allow it to concentrate its resources and investments on developing its industrial chemicals and performance products businesses. "This project is based on our firm belief that our specialty activities require today a differentiated strategy for each of these activities," said CEO Thierry Le Henaff.
In response to fears of redundancy and to protests from employees at a number of production sites, the trade unions negotiated, with the Arkema management, industrial and social guarantees as well as support measures designed to protect the rights of employees should the Klesch group implement redundancies following their take-over of the vinyl products activities. Hence two trust funds of €20 M were set up to secure compensation payments and the rights of employees of the companies that were sold off.
The vinyl sale also established Le Hénaff's reputation for managing difficult stakeholder situations. Rather than simply executing the transaction and moving on, Arkema worked with unions to establish employee protections—a level of social engagement that would prove valuable in building organizational trust through subsequent restructurings.
The aftermath validated the decision to exit. Arkema paid Klesch $135 million to take over the ailing business, which had annual sales of more than $1 billion. Klesch subsequently named it Kem One. By March 2013, however, Kem One had filed for the European equivalent of bankruptcy as slow demand hobbled the European vinyls industry.
An arbitration court has ordered the Swiss industrial products firm Klesch Group to pay Arkema $78 million and court costs in a dispute over the 2012 sale of Arkema's vinyl products business. Klesch sought €310 million from Arkema, claiming misrepresentation. Arkema won the arbitration, receiving $78 million from Klesch—a reversal that partially offset the original payment.
Following the sale, Arkema reorganized its activities into three business segments: High Performance Materials, Industrial Specialties and Coating Solutions. The reorganization reflected the company's new strategic clarity: no more commodities, no more low-margin businesses, no more cyclical traps.
In 2012, Arkema bolstered its position in polyamides by the acquisition of two Chinese companies: Casda, the world leader in sebacic acid derived from castor oil, and Hipro Polymers, which produces polyamides 10 from sebacic acid. Even as it exited vinyl, Arkema was acquiring specialty positions that aligned with its transformation strategy.
The vinyl divestiture crystallized a key insight about corporate transformation: sometimes the most valuable strategic move is paying to exit a business rather than accepting mediocrity. Le Hénaff understood that the vinyl business would consume management attention, capital resources, and organizational energy that could be better deployed building positions in specialty materials. The €600 million cost of exit was, in retrospect, one of the best investments Arkema ever made.
V. Inflection Point #2: The Bostik Acquisition (2015)
If the vinyl sale represented Arkema's determination to escape its commodity past, the Bostik acquisition signaled its commitment to building a specialty materials future. And the deal carried a special irony: Arkema was buying Bostik from Total—the same company that had spun off Arkema nine years earlier.
Bostik, the world's n°3 in industrial adhesives, is Arkema's largest acquisition, completed in February 2015. This new Arkema business contributes to the Group's ambition to become the world leader in specialty chemicals.
Arkema is likely to pursue fewer large-scale acquisitions in 2015 following its purchase of adhesives maker Bostik last year, the CEO of the France-headquartered chemicals producer said on Thursday. The company agreed to acquire France-headquartered Bostik for €1.74bn from Total, its own former parent, in late 2014, and also brought a €200m thiochemicals plant in Malaysia on stream at the start of this year, but is keen to keep its financial gearing levels at an acceptable margin, according to Arkema CEO Thierry le Henaff.
Jones Day represented Total SA in the €1.74 billion (US$2.2 billion) acquisition by the French group Arkema, one of the world's major players in specialty chemicals, of its Bostik affiliate, a global adhesives company.
For Le HĂ©naff, the Bostik acquisition was deeply personal. This was the business where he had spent most of his career before joining Arkema's leadership. After starting his career with Peat Marwick Consultants, in 1992 he joined Bostik, Total's Adhesives division, where he held a number of operational positions in France and worldwide. In July 2001, he was appointed Chairman and Chief Executive Officer of Bostik Findley, the new entity resulting from the merger of Total's and Elf Atochem's Adhesives divisions.
The strategic rationale was compelling. Bostik's growth prospects and the complementarities identified between the two groups will sustain the success of this high value creating project. With the acquisition of Bostik, Arkema fulfils a project that is perfectly aligned with its strategy to reinforce its position in specialty chemicals and further develop its High Performance Materials segment. Bostik, which will constitute a new business unit of this segment, holds leadership positions in most of its markets, has internationally recognized brands and technologies, and achieves around €1.5 billion sales with 4,900 employees in over 40 countries.
The financing of this operation was successfully finalized early 2015 with a €700 million bond issue with a 1.5% coupon, and complements the hybrid bond issue conducted in October 2014 and the share capital increase completed in December 2014.
The company issued two €700m bonds, along with a €350m share capital increase in late 2014 to help finance the Bostik acquisition.
The integration success validated the acquisition thesis. A sign of the firm demand for specialty adhesives, Bostik's revenue rose by 26% from €1.53 billion in 2014, the year it joined the Arkema family, to €1.94 billion in 2017. In addition to harnessing the €50 billion global adhesives market's 3% average annual growth, Bostik is capitalizing on the marketing, financial and technological synergies created by its integration into Arkema. "The merger increased our capex capacity and innovation potential, while making our brands more attractive to professionals and consumers."
Targeted acquisitions over the last three years have accelerated the growth of Bostik's Construction and Consumer Products segments. In late 2016, they acquired Den Braven, a leader in high-performance sealants for insulation and construction in Europe. In 2017, Bostik expanded its flooring solutions in the U.S.
By 2024, the company had achieved annual revenues of €2.7 billion, employing over 7,000 people across more than 50 countries, solidifying its status as a key player in the global adhesives market.
The Bostik deal transformed Arkema's portfolio composition and growth profile. Adhesives became one of three core pillars—alongside Advanced Materials and Coating Solutions—that would define the company's identity as a specialty materials leader.
VI. Continued Transformation: Divestitures & Bolt-On M&A (2016–2021)
The PMMA Exit and the Pure-Play Vision
The years following the Bostik acquisition saw Arkema continue its portfolio refinement with a series of targeted divestitures and acquisitions. The pattern was consistent: exit businesses with commodity characteristics, acquire specialty positions that extended technological capabilities or geographic reach.
The PMMA (polymethyl methacrylate) divestiture in 2020-2021 exemplified this approach. PMMA, marketed under the well-known Plexiglas brand in the Americas, was a successful business—but it didn't fit the specialty strategy.
Sales in 2020 are estimated at around €510 million for an EBITDA around €122 million, a solid performance in the context of Covid-19. In 2019, EBITDA was close to its historic high, at €160 million.
The offer received is based on an enterprise value of €1,137 million, and the capital gains tax is expected at around 15% of this amount. With this proposed divestment, which comes after the sale of the functional polyolefins business to Korean group SK last June, the share of Specialty Materials sales within Arkema increases from 79% to 87% based on the 2019 proforma figures. The Group thus takes another major step in its transformation, with the ambition of becoming a pure Specialty Materials player by 2024, centered only around Adhesive Solutions, Advanced Materials, and Coating Solutions.
Arkema has completed the sale of its PMMA business to US plastics and rubber producer Trinseo, a deal announced in December 2020. The French chemical company said the divestment is "fully in line" with its ambition to become a pure specialty materials player by 2024, with the three complementary segments of Adhesive Solutions, Advanced Materials and Coating Solutions. The transaction has an enterprise value of €1.14 billion, slightly more than nine times the activities' estimated EBITDA for 2020.
Strategic Acquisitions: Building Specialty Positions
The Ashland Performance Adhesives acquisition in 2021 demonstrated Arkema's willingness to pay premium valuations for businesses with genuine specialty characteristics.
With estimated sales of around US$ 360 million and an estimated EBITDA at a very high level of around US$95 million in 2021, Ashland offers a portfolio of high performance adhesive solutions in high-value-added industrial applications.
The offer was made on the basis of a US$ 1,650 million enterprise value, i.e. 15x the estimated 2021 EBITDA after taking into account the tax benefits linked to the structure of the transaction.
Ashland's Performance Adhesives business, which employs approximately 330 people and operates 6 production plants, mainly in North America, has enjoyed sustained growth in recent years and has significant growth potential in Europe and Asia. Combined with Arkema's global positioning, the excellent technological, geographic and commercial complementarities of this acquisition will enable Bostik to expand its offering and position itself as a major player in high performance industrial adhesives. This acquisition also allows to upgrade the 2024 profitability target for Arkema's Adhesive Solutions segment, which now aims for an EBITDA margin above 17%, among the very best in the industry, with sales of over €3 billion.
Arkema finalized on 28 February 2022 the acquisition of Ashland's Performance Adhesives business, a first-class leader in high performance adhesives in the United States. This operation marks a major step in Arkema's strengthening of its Adhesive Solutions segment.
Most recently, On 2 December 2024, Arkema finalized the acquisition of Dow's flexible packaging laminating adhesives business for an enterprise value of US$150 million, marking an important milestone in the strategy to strengthen the Group's position in the flexible packaging adhesives market. This acquisition will enable Arkema to ideally complement its existing commercial presence, product offering and technological breadth for flexible packaging.
The M&A activity across nearly two decades reveals a clear pattern: disciplined transactions that extend technological capabilities, strengthen geographic positions, and maintain financial flexibility. Le HĂ©naff avoided transformational deals that would have stretched the balance sheet or introduced integration risk. Instead, he built Arkema's specialty portfolio brick by brick through dozens of targeted acquisitions.
VII. Inflection Point #3: The Battery Materials Opportunity (2019–Present)
PVDF: The Hidden Champion
Perhaps no part of Arkema's story better illustrates the power of patient positioning than its battery materials business. For decades, Arkema produced PVDF (polyvinylidene fluoride) primarily for industrial coatings and water filtration. The material's exceptional chemical resistance and thermal stability made it valuable in demanding environments—but hardly exciting.
Then the electric vehicle revolution arrived, and PVDF's properties proved ideal for battery applications.
Arkema is pioneer in development of advanced materials for battery technology and our high-performance PVDF materials for battery cell manufacturing serve battery industry for decades. Our Kynar® PVDF solutions have been used in lithium-ion battery technology for many years as electrode binders for active materials in cell manufacturing. Our continued innovation has led to solutions that are now being used for both anode & cathode binders and separator coatings inside the battery cell.
Kynar® HSV 900 PVDF has demonstrated exceptional versatility, gaining widespread commercial adoption alongside a broad range of cathode active materials, especially lithium iron phosphate (LFP), and has since become a legacy market reference in the battery industry. To date, Kynar® HSV 900 PVDF has already enabled the production of batteries powering over 10 million electric vehicles.
Arkema is proud to announce that a team of its scientists and engineers was recognized with the prestigious Heroes of Chemistry Award by the American Chemical Society (ACS) for their groundbreaking work on Kynar® HSV 900 PVDF manufactured without the use of fluorosurfactant for battery applications. This recognition highlights Arkema's long-standing commitment to innovation and sustainability in the e-mobility market. Ramin Amin-Sanayei, Medhi Durali, Steve Erhardt, Carl Stewart, Barry Oakley, Lining (Michael) Zhu, and Sun Jia-Yue were recognized for their contributions to the development of the Kynar® HSV 900 PVDF material, first introduced in 2005.
Capacity Expansion
France-based specialty chemicals and materials company Arkema announced a 50% increase in its Kynar PVDF fluoropolymer production capacities at its Pierre-Bénite site in order to address the fast-growing demand for materials for lithium-ion batteries. Arkema now aims for sales of at least €1 billion in the battery sector by 2030.
With this PVDF capacity increase, Arkema accelerates its development in China in order to meet the strong demand from its partner customers in the lithium-ion battery business and support the significant growth in the water filtration, specialty coatings, and semiconductor sectors. Arkema, a global leader in PVDF production, also recently announced a 50% PVDF capacity increase at its Pierre-BĂ©nite site in France, which is scheduled to come on stream in the first quarter of 2023.
Arkema, a global leader in specialty chemicals, has announced a significant $20 million investment to expand its polyvinylidene fluoride (PVDF) production capacity at its Calvert City, Kentucky facility by 15%.
This strategic move is designed to meet the escalating demand for high-performance resins in North America, particularly within the burgeoning lithium-ion battery, energy storage, semiconductor, and cable industries. The expansion, slated for completion by mid-2026, reflects Arkema's commitment to strengthening its regional production capabilities and supporting the rapid growth of these critical sectors.
This 15% capacity expansion of Arkema's PVDF production site in Calvert City, Kentucky, represents an investment of around 20 million US dollars and is aligned with the strategy of the Group to increase its global PVDF footprint at a pace and with capabilities that match market development. This will support the increasing demand for locally manufactured high-performance resins for lithium-ion batteries as well as the growing semiconductor and cable markets.
A Comprehensive Battery Materials Platform
Arkema's battery materials opportunity extends well beyond PVDF. This offering includes Kynar® PVDF cell cathode binders and separator coating, Incellion™ acrylic based binders and additives for anode, separator and primer, Foranext® Ultra-pure LiFSI salt and LiTDI additives for electrolytes, Graphistrength® conductive additives, Bostik adhesives, Polytec PT Thermal Interface Materials, Rilsan® Polyamide 11 for EV busbar insulation and cooling lines, Keptan® PEKK and Polyimide films, and Sartomer® UV curable solutions for insulation.
Expanded in 2021, Arkema's Battery Center, in Lyon, plays a key role in this transition and strives to develop high-performing materials for current lithium cell technologies as well as next-generation batteries, such as semi-solid, solid and sodium. Closely connected with other research centers, in Asia and the USA, the center is equipped with cutting-edge technologies allowing battery manufacturers to leverage reliable and real-life data to speed up the development of the next generation of batteries.
Arkema announced investments in 2 start-ups to strengthens its position as the partner of choice for co-developing the safer, more efficient and more sustainable batteries of the future: Tiamat, a pioneer in sodium-ion battery technology, will accelerate Arkema's development of technical solutions adapted to new lithium-free technologies. Proionic, a leading Austrian start-up in the production and development of ionic liquids compatible with gel polymer electrolytes for semisolid batteries.
The battery materials story illustrates Arkema's strategic advantage in technological longevity. Unlike companies rushing to participate in the EV boom through acquisitions at peak valuations, Arkema has been selling PVDF into battery applications for two decades. This deep expertise translates into customer relationships, manufacturing know-how, and innovation capabilities that new entrants cannot easily replicate.
VIII. The 2024 Reality and 2028 Ambition
Current Financial Position
Solid performance in 2024, with EBITDA slightly up at €1.53 billion and an EBITDA margin of 16.1%, reflecting the Group's resilience and capacity to adapt in a challenging macroeconomic environment.
Sales of €9.5 billion, stable compared with 2023: Volumes up 2.4% supported by growth in Specialty Materials in Asia. More favorable volume dynamics in certain markets such as sports, packaging, batteries and energy. Negative 3.0% price effect, reflecting a slight decrease in raw materials prices. EBITDA of €1,532 million and EBITDA margin at 16.1%, slightly up compared to last year, benefiting from the Group's balanced geographical footprint and the quality of its portfolio of technologies.
Adjusted net income thus amounted to €616 million, representing €8.23 per share (€8.75 per share in 2023).
The 2024 results demonstrate both the strengths and challenges of Arkema's current positioning. Revenue stability in a weak demand environment reflects portfolio resilience. The 16.1% EBITDA margin indicates specialty positioning is delivering pricing power. But the Asian growth offset by European weakness points to geographic dependencies that remain.
Strategic Outlook to 2028
At the September 2023 Capital Markets Day, Arkema unveiled its medium-term ambitions. Building on the achievements since the April 2020 strategy update, the Group now aims to accelerate its organic sales growth in the medium term, by capitalizing on its recent or future industrial investments in high value-added technological solutions serving fast-growing market segments supported by sustainable megatrends. By 2028, Arkema aims to achieve sales of around €12bn with an elevated EBITDA margin of around 18%. Average organic sales growth is expected at around 4% per year and average organic EBITDA growth at 7 to 8% per year over the 2024-28 period.
In order to achieve this ambition, Arkema will place sustainability at the heart of its strategy through 5 main drivers: Leveraging the strength of One Arkema to enhance employee empowerment and customer intimacy. Achieving superior growth from sustainable innovation in 5 key submarkets driven by megatrends where Arkema has built leading positions with cutting-edge technologies. Ramping up recent capex, notably the bio-based PA11 plant in Singapore and PVDF expansions, and carrying out new high return projects in batteries, renewable energy, decarbonization and bio-based products. Further strengthening the portfolio with bolt-on acquisitions and the finalization of the divestment of Intermediates. Driving manufacturing excellence including a strong focus on decarbonization and digitalization.
In a macroeconomic environment which remains uncertain and marked by weak demand at the start of the year, the Group aims for its EBITDA to grow in 2025 and reach between €1.53 billion and €1.67 billion, supported by a significant additional contribution from its major projects in Specialty Materials of around €100 million.
IX. Competitive Positioning and Strategic Analysis
The Adhesives Landscape
Arkema's Bostik division competes in a fragmented but competitive global market. The global adhesives and sealants market size was estimated at USD 72.76 billion in 2024 and is projected to reach USD 123.20 billion by 2033, growing at a CAGR of 6.0% from 2025 to 2033.
Some of the key players in the global specialty adhesives market are 3M, Arkema Group (Bostik SA), H.B. Fuller Company, Henkel AG & Co. KGaA, Master Bond Inc., Nexus Adhesives, Permabond LLC, Pidilite Industries Ltd, Sika AG, and Threebond.
In the adhesives & sealants market matrix, Henkel AG & Co. KGaA (Star) leads with a strong market presence and a wide product portfolio, driving large-scale adoption across the industry.
Henkel remains the industry leader, with its Loctite brand commanding significant share in industrial adhesives. Sika has grown aggressively through acquisitions, becoming a dominant force in construction adhesives. H.B. Fuller has consolidated specialty positions in North America. Against these competitors, Arkema/Bostik competes through technological differentiation and specialty focus rather than scale.
Porter's Five Forces Analysis
Supplier Power (Moderate): Arkema sources commodity chemical feedstocks that are generally available from multiple suppliers. However, certain specialty precursors for advanced materials have more concentrated supply bases. The company's vertical integration in acrylic monomers provides some protection.
Buyer Power (Low to Moderate): Arkema's specialty positioning means customers often have few alternatives for high-performance materials. Battery cell manufacturers need PVDF with specific molecular weight distributions; aircraft manufacturers need adhesives meeting stringent aerospace specifications. This creates switching costs and pricing power.
Threat of New Entrants (Low): The specialty chemicals industry features significant barriers to entry: regulatory approvals, customer qualification processes that span years, manufacturing know-how accumulated over decades, and R&D investments required to develop differentiated products. New competitors emerging in battery materials from China represent the primary competitive threat.
Threat of Substitutes (Moderate): Technology shifts could displace specific Arkema products—solid-state batteries might require different materials than liquid lithium-ion cells, for example. However, Arkema's investments in next-generation battery technologies and multiple chemistry platforms provide some protection against technological disruption.
Competitive Rivalry (High): Specialty chemicals markets feature intense competition among well-capitalized participants. Henkel, 3M, Sika, BASF, and regional players all compete for share in Arkema's target markets. Differentiation comes from technical performance, customer relationships, and innovation speed rather than cost alone.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Limited. Specialty chemicals don't benefit from scale in the way commodity businesses do. Arkema's competitive advantage comes from specialization rather than size.
Network Effects: None. Chemical products are not platforms, and larger networks of customers do not increase product value.
Counter-Positioning: Strong. Arkema's focused specialty positioning creates counter-positioning versus large chemical conglomerates. Competitors like BASF or Dow could theoretically compete in Arkema's specialty markets but would face significant margin dilution given their higher cost structures optimized for larger-scale commodity production.
Switching Costs: Moderate to High. Customers using Arkema's specialty polyamides or PVDF in critical applications face significant qualification costs and supply chain disruption risks from switching. This creates sticky customer relationships.
Branding: Weak. Unlike consumer products, specialty chemicals rarely command brand premiums. Arkema's brands (Kynar, Rilsan, Bostik) have recognition within industrial buyer communities but limited pricing power based on brand alone.
Cornered Resource: Moderate. Arkema's 20+ years of PVDF development for battery applications represents accumulated know-how that cannot be easily replicated. Certain bio-based polyamide technologies using castor oil derivatives also represent somewhat unique resource positions.
Process Power: Strong. Arkema's manufacturing processes for specialty polymers have been refined over decades. Production of high-purity PVDF at scale, bio-based polyamide synthesis from renewable feedstocks, and precision adhesive formulations all represent process advantages that competitors cannot easily match.
X. Bull and Bear Cases
The Bull Case
Megatrend Alignment: Arkema sits at the intersection of several powerful secular trends—electrification of transportation, lightweighting of vehicles and aircraft, sustainable materials replacing petrochemical alternatives, and growing energy storage requirements. These trends could drive above-market growth for years.
Portfolio Quality: The transformation from commodity chemicals to specialty materials is substantially complete. The portion of sales contributing significantly to Sustainable Development Goals increased again to reach 53% of sales (51% in 2023). This positioning should support both growth rates and margins.
Battery Materials Optionality: The PVDF business represents significant option value. If EV adoption accelerates to meet climate goals, Arkema's capacity expansions could generate substantial incremental earnings. Arkema now aims for sales of at least €1 billion in the battery sector by 2030.
Management Execution: Thierry Le Hénaff's track record across nearly two decades—exiting commodities at the right time, acquiring Bostik at the right price, expanding into Asia ahead of growth—provides confidence in continued strategic execution. Arkema's CEO and chairman, Thierry Le Hénaff, has been named 2024 ICIS CEO of the Year! This award recognizes his exceptional leadership and our team's dedication to innovation and sustainability.
Valuation: The stock trades at modest multiples relative to specialty chemical peers, reflecting concerns about European industrial exposure and EV market softness that may prove temporary.
The Bear Case
EV Market Deceleration: The Group has revised its 2030 target to 60% (against 65% initially), to take into account the slower-than-expected growth of the electric vehicle market. The battery materials opportunity depends on EV adoption continuing to grow. Policy changes, range anxiety, charging infrastructure limitations, or cheaper ICE alternatives could slow adoption.
European Industrial Weakness: Contrasting trends between regions, with very strong growth in Asia, a relative stability in North America and a decline in Europe. Arkema's European manufacturing base faces higher energy costs, more stringent regulations, and weaker end-market demand than competitors positioned in the U.S. or Asia.
Chinese Competition: Chinese chemical companies are expanding capacity aggressively, including in specialty materials that have been Arkema's growth engines. Price competition from lower-cost Chinese producers could compress margins in materials like PVDF.
Regulatory Risk: The European Union's chemicals regulations continue to tighten. On 21 January 2025, Arkema presented to the Central Works Council a project to reorganize the activities of its Jarrie site in order to ensure its future by refocusing on hydrogen peroxide, chlorate and perchlorate activities. The Jarrie site has been impacted since 23 October 2024, by the abrupt cessation of its salt supply by its historical supplier Vencorex, which has been placed in receivership by its Thai shareholder PTT GC. This project would result in the shutdown of the chlorine, soda, methyl chloride and technical fluids production activities and the loss of 154 jobs.
Currency Exposure: With approximately one-third of sales in each of Europe, North America, and Asia, Arkema faces significant currency translation effects. Euro strength could reduce reported earnings from non-Euro regions.
XI. Key Performance Indicators for Investors
For investors tracking Arkema's ongoing transformation and execution against strategy, three metrics deserve particular attention:
1. EBITDA Margin
Target: Progress toward 18% by 2028 (from current 16.1%)
The EBITDA margin represents the clearest measure of specialty positioning success. As Arkema continues to exit lower-margin businesses and grow higher-margin specialty products, the consolidated margin should expand. Failure to progress toward the 18% target would suggest either competitive pressure in specialty segments or incomplete portfolio transformation.
2. Specialty Materials as Percentage of Revenue
Target: Complete elimination of Intermediates segment
Arkema has set an explicit goal of becoming a "pure Specialty Materials player." The Intermediates segment (roughly 18% of current sales) includes legacy businesses that management has targeted for divestiture. Progress toward this goal—and the valuation achieved on any divestitures—will indicate strategic execution quality.
3. Battery Materials Revenue
Target: €1 billion by 2030
This metric captures both market opportunity realization and execution on capacity expansions. Battery materials represent Arkema's highest-growth opportunity; tracking performance against the €1 billion target provides visibility into whether megatrend tailwinds are translating into actual revenue.
XII. The Le HĂ©naff Legacy
Thierry Le Henaff has been chairman and CEO of Arkema since the company's stock market listing in 2006 when it was spun off from Total.
Nearly two decades at the helm of a single company is increasingly rare among public company CEOs. Le HĂ©naff's tenure has spanned the full transformation from unwanted spin-off to specialty materials leader. Along the way, he has executed dozens of acquisitions, divested billions of euros of commodity businesses, built a global presence in Asia, and positioned the company at the intersection of major sustainability megatrends.
The strategic consistency is remarkable. From the earliest days, Le Hénaff articulated a vision of Arkema as a specialty materials company rather than a commodity chemical producer. Every major decision since—the vinyl exit, the Bostik acquisition, the PMMA divestiture, the battery materials investments—has been consistent with that vision.
The question facing investors now is whether Arkema's next chapter will be as successful as its first. The company has set ambitious targets: €12 billion in sales by 2028, an 18% EBITDA margin, organic growth rates of 4% per year. These targets assume that the transformation strategy remains correct—that specialty positioning beats commodity scale, that megatrend tailwinds continue blowing, and that execution remains sharp.
The track record suggests these assumptions deserve respect. Le Hénaff has repeatedly demonstrated the ability to see around corners—exiting vinyl before competitors, investing in Asia before it became consensus, building battery materials positions before the EV boom. That foresight, combined with disciplined execution and financial prudence, has turned an unwanted spin-off into a €9.5 billion specialty materials leader.
Whether the next decade proves as successful as the last depends on factors both within and beyond management's control. The EV transition timeline, Chinese competitive intensity, European industrial policy, and global economic cycles will all influence outcomes. But Arkema enters this period from a position of strategic clarity and financial strength that few would have predicted on that May day in 2006 when the company first traded in Paris.
Arkema trades on Euronext Paris under the symbol AKE. This analysis is intended for informational purposes only and does not constitute investment advice.
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