Elkem

M&A Activity • Dec 30, 2019

Elkem acquires Polysil, a leading Chinese silicone elastomer & resins company

Elkem acquires Polysil, a leading Chinese silicone elastomer & resins company

Oslo, December 30, 2019: Elkem ASA has entered into an agreement to acquire all

of the shares in Polysil, a leading Chinese silicone elastomer & resins material

manufacturer with strong positions in baby care and food grade silicones, as

well as silicone products for the electronics and medical markets. Polysil and

Elkem's complementary product and market positions provide a solid platform for

further specialisation and growth in China and globally.

Polysil is a privately owned company with more than 350 employees located in

Zhongshan in Guangdong, China. The company has leading technology positions in

production and development of Heat Cured Rubber (HCR), Liquid Silicone Rubber

(LSR) and specialty resin and Pressure Sensitive Adhesives (PSA). Polysil has

two production facilities and a research and development centre with more than

50 engineers.

In 2019, Polysil is estimated to generate a total operating revenue of RMB 612

million with an EBITDA of RMB 110 million.

The companies have agreed an enterprise value for Polysil of up to RMB 941

million, including potential bonus and earn-out depending on pre-agreed

criteria.

"We are continuing to deliver on our growth and specialisation strategy.

Acquiring Polysil will strengthen our position in selected specialised silicones

segments in China. There are considerable synergies in leveraging Elkem's

upstream capabilities to supply raw materials and intermediates, and in

combining both the product portfolio and the domestic and global market

positions of Polysil and Elkem," says Michael Koenig, CEO of Elkem.

Approximately 90 per cent of Polysil's revenues are generated in China,

primarily in South China. Elkem's presence and positions in other parts of China

and internationally provide a solid platform for Polysil's products and for

further growth.

"Polysil is very pleased to become part of the Elkem group and looks forward to

working closely with Elkem in achieving common goals. Elkem's products,

knowledge and brand complement the Polysil product range and will benefit

Polysil customers going forward," says Hanxi Ma, the largest shareholder of

Polysil.

"Polysil's products and market positions in food, baby care, electronics and

medical markets are complementary to Elkem. Polysil has particularly strong

positions in the fast-growing South China market where approximately half of all

Chinese silicone rubber consumption is. There is significant potential in

utilising Polysil's high-end liquid silicones rubber and pressure sensitive

adhesives specialty positions and in further developing both products and

markets. Polysil's strong research and development capabilities will be very

important for development of products for both the Chinese market and globally,"

says Frederic Jacquin, Senior Vice President Elkem Silicones.

Completion of the acquisition is subject to final regulatory approvals. Closing

is expected by end of first quarter 2020.

In connection with this transaction, Elkem was advised by Alantra, Wikborg Rein

Advokatfirma AS, and EY, whilst the sellers were advised by Han Kun Law Offices.

For further information:

Frederic Jacquin, SVP Silicones

Telephone +33 (4) 72 13 1929

E-mail frederic.jacquin@elkem.com

Odd-Geir Lyngstad, VP Finance and Investor Relations

Telephone +47 976 72 806

E-mail odd-geir.lyngstad@elkem.com

Alternative performance measures (APMs)

An APM is defined as a financial measure of historical or future financial

performance, financial position, or cash flows, other than a financial measure

defined or specified in the applicable financial reporting framework (IFRS).

The APMs presented herein are not measurements of performance under IFRS or

other generally accepted accounting principles and should not be considered as a

substitute for measures of performance in accordance with IFRS. Because

companies calculate the APMs presented herein differently, Elkem's presentation

of these APMs may not be comparable to similarly titled measures used by other

companies.

In this announcement the following APM is used

· EBITDA is defined as profit (loss) for the period, less income tax

(expenses), finance expenses, foreign exchange gains (losses), finance income,

share of profit from equity accounted financial investments, other items,

impairment loss and amortisation and depreciation.

About Elkem ASA

Founded in 1904, Elkem is one of the world's leading suppliers of silicon-based

advanced materials with operations throughout the value chain from quartz to

specialty silicones, as well as attractive market positions in specialty

ferrosilicon alloys and carbon materials. Elkem is a publicly listed company on

the Oslo Stock Exchange and is headquartered in Oslo. The company has 6200

employees with 29 production sites and sales offices in a total of 28 countries

worldwide. In 2018 Elkem had revenues of NOK 25.9 billion. To learn more, please

visit www.elkem.com