Fueled by acquisitions, Solenis marks a decade of growth

WILMINGTON — In 2014, global chemical company Ashland had sold off its water division to a private equity firm for $1.8 billion as a bid to refocus the company on specialty chemicals.

A decade later, the remnants of that company, named Solenis, is now valued at $8 billion, fueled by a string of 23 mergers and acquisitions led by its  CEO John Panichella. Today, Solenis does business in 120 companies and shows no signs of slowing down.

“We’re competing in a $85 billion market, so if you look at our market share, it’s still relatively low in comparison,” Panichella told the Delaware Business Times. “With our fiscal year ending, we had a strong performance. We think we can grow the top line of the company by 1 to 2% per year, just through acquisitions and consolidating the market. There’s another 4 to 5% through organic growth.”

Solenis is a homegrown company, tracing its roots to the 1920s from the Hercules Company when it broke up from DuPont’s explosive and gunpowder business. In the 1950s, Hercules filed the first patent in Polyaminopolyamide-epichlorohydrin (PAE) resins, a wet-strength adhesive that is now the bedrock of much of Solenis’ business today.

Solenis CEO John Panichella has lead 23 mergers and acquisitions and has no plans of slowing down. | DBT FILE PHOTO BY JACOB OWENS

That chemistry is in products in the company’s portfolio, making facial and bath wipes, hospital-grade disinfectant wipes retain moisture and paper towels absorbent. Another new product includes fiber packaging for fast food wrappers, replacing previous wrappers that had traces of per- and polyfluoroalkyl (PFAS) chemicals.

“When you go to Chipotle or other fast food restaurants, that wrapper has a water-based chemical coating that makes the product recyclable,” Panichella said.

But Solenis, in some ways, touches all the consumers in the industrial water business, he added. That includes energy companies that produce electricity and other manufacturers. In the last decade, the company has grown in leaps and bounds, starting with opening its European headquarters in Switzerland in 2014, to buying assets from full-fledged companies like Clearwater Specialties to areas of business, like the pulp and paper assets from Connell Bros. in India.

In the last five years, Solenis has solidified its place in the market by buying the paper business of ChemSystems to serve African customers; signing a deal to acquire cleaning product company Diversey for $4.6 billion; expanding in east Europe with another acquisition in Neu Kimya, among others. 

Driving the acquisitions are two strategies, Panichella explained. First, is the expansive sales staff that continues to find new avenues to grow the business. Second is to manufacture products in the same country where its customers are to reduce expenses.

“The unique thing about Solenis is that we’re in 120 countries with 6,000 sales staff. And they’re out there in those countries, and they know their competitors,” he said. “That’s generally where the idea pipeline is formed.”

Panichella told DBT that the string of mergers and acquisitions is also the result of a careful assessment of what each one can serve Solenis. Each potential avenue is weighed by technology it could offer that was not already in the company’s portfolio. 

For example, that’s how Solenis bought a Belgium company, Topchim. That company offered an expertise in barrier coatings for fiber products like food wrappers, or wax coatings on trays that chicken is packaged in before it’s sold at the grocery store.

“That was really going to change the grocery aisle. We saw that as a real opportunity to build that in our global network,” he added.

The other aspects of the Solenis strategy include whether a potential acquisition would grow or expand in markets to serve as a direct channel for customers. It’s estimated 30% of the acquisitions in the past were able to open distribution channels in countries where Solenis wanted to be, Panichella said.

When the COVID-19 pandemic made it difficult to export and import goods and materials, Solenis managed to thrive as it managed 70 manufacturing plants across the globe. Each one of those plants is targeted to serve the customers in specific regions, which meant Solenis was able to avoid the supply chain delays in exporting goods overseas. But even so, the company saw some struggles with sourcing raw materials, much like other chemical companies did and continue to see today.

The final step is whether that acquisition would be transformational for Solenis, be it setting a new trajectory for its financial future through cost savings and revenue.

“It’s like, how can I make 1 plus 1 equal 3,” Panichella joked. “But in the end, I want to have trained experts to help customers solve their problems, and when I can do that, we can grow the company.”

Over the years, Solenis has received support from the state, including a $3.9 million incentive package from the state’s Strategic Fund in 2018 to grow its workforce as well as a $1 million grant in 2015. The company also is looking into retrofitting a building at the Chestnut Run Innovation & Science Park campus to relocate offices by 2025.

Even with offices all over the world and operations in scores of countries, Panichella said that the plan is to maintain the corporate offices and the research facility in Delaware.

“The vast majority of the executive team is here, and so is the single largest research and development facility we have in the world,” he said. “As we grow, we see many good jobs from the technical side as well as in our corporate office.”