DOW
Styrenics business sold to Bain Capital affiliate for USD 1.6 bn / Long-term supply deal pads price
In a deal financial analysts estimate could be worth more than USD 2 bn, Dow Chemical (Midland, Michigan / USA; www.dow.com) has agreed to sell its Styron business to Bain Capital Private Equity (Europe: London / UK; www.baincapitalprivateequity.comm) – see Plasteurope.com of 14.01.2010. The sale comes six months after Dow’s announcement of the divestment plan in July 2009. At the time, CEO Andrew Liveris said the group hoped to receive USD 1-2 bn for the carve-out. The transaction is now planned to close in August of this year.
An obviously pleased Liveris said the deal is in line with management’s goals of “further focusing its portfolio by shedding non-strategic assets.” He added that “this transaction is yet another step in our disciplined approach.” Styron is a backward-integrated manufacturer of polystyrene, and engineering polymers ABS and SAN in addition to rubber and latex. Dow is also throwing in its share of Americas Styrenics, the 50:50 joint venture with Chevron Phillips (see Plasteurope.com of 12.04.2007).
While Bain is officially paying USD 1.63m for the assets, Dow has attached provisions that are expected to pad the total. Extras include an option for the Michigan group to take an equity stake of around 15% in Styron, as well as “several long-term supply, service and purchase agreements,” which the US chemical giant said “will generate substantial value.” As incorporated, Styron will have an estimated USD 3.5 bn in annual sales revenue with more than 40 manufacturing plants worldwide and around 1,900 employees.
Analysts calculate that the acquisition price values Styron at 6 to 6.5 times the company’s estimated EBITDA of USD 257m for 2010. Other commentators said Dow’s coup is further proof that the private equity sector, declared dead a year ago, is regaining its former strength. Still up for grabs is the styrenics business of BASF (Ludwigshafen / Germany; www.basf.com), which has been on the market since 2007 – see Plasteurope.com of 18.07.2007. At the annual results presentation on 25 February, CEO Jürgen Hambrecht declined comment on the progress of the sale plan.
An obviously pleased Liveris said the deal is in line with management’s goals of “further focusing its portfolio by shedding non-strategic assets.” He added that “this transaction is yet another step in our disciplined approach.” Styron is a backward-integrated manufacturer of polystyrene, and engineering polymers ABS and SAN in addition to rubber and latex. Dow is also throwing in its share of Americas Styrenics, the 50:50 joint venture with Chevron Phillips (see Plasteurope.com of 12.04.2007).
While Bain is officially paying USD 1.63m for the assets, Dow has attached provisions that are expected to pad the total. Extras include an option for the Michigan group to take an equity stake of around 15% in Styron, as well as “several long-term supply, service and purchase agreements,” which the US chemical giant said “will generate substantial value.” As incorporated, Styron will have an estimated USD 3.5 bn in annual sales revenue with more than 40 manufacturing plants worldwide and around 1,900 employees.
Analysts calculate that the acquisition price values Styron at 6 to 6.5 times the company’s estimated EBITDA of USD 257m for 2010. Other commentators said Dow’s coup is further proof that the private equity sector, declared dead a year ago, is regaining its former strength. Still up for grabs is the styrenics business of BASF (Ludwigshafen / Germany; www.basf.com), which has been on the market since 2007 – see Plasteurope.com of 18.07.2007. At the annual results presentation on 25 February, CEO Jürgen Hambrecht declined comment on the progress of the sale plan.
03.03.2010 Plasteurope.com [215655]
Published on 03.03.2010
German version of this article...