PQ Puts Itself up for Sale

PQ Corp. has hired the investment banking firm of Credit Suisse First Boston to assist it in examining strategic alternatives that could include the sale of the company.

Formed in Philadelphia in 1831 as a soap and candle maker, PQ is still owned by descendants of its founding family. Based today in Valley Forge, Pa., the company makes silicates, zeolites, and other inorganic chemicals used in detergents, papermaking, and a wide variety of other applications. It claims annual sales in excess of $500 million.

PQ, a low-profile firm, isn't revealing details about the strategic review. In a question-and-answer letter prepared for employees, the firms's chairman, William E. Fruhan Jr., and CEO, Stanley W. Silverman, say they are undertaking the review "considering PQ's strong performance over the past four years, the current strength of the mergers-and-acquisitions market, the favorable long-term capital gains tax environment, and the geographic expansion to grow PQ."

According to Peter Young, head of investment banking firm Young & Partners, options available to PQ include an outright sale to a financial or industry buyer, a recapitalization, and creation of an employee stock ownership plan. A public stock offering is also possible, he says, but midsized chemical firms like PQ aren't very popular with investors now.

PQ is generally considered to be the largest U.S. maker of silicate chemicals. According to the market research firm SRI International, PQ operates almost 30% of the 1.3 million tons of annual U.S. sodium silicates capacity.

The firm is active worldwide but has yet to establish manufacturing in China. In April, it announced the acquisition of land in China's Tiajin Economic Development Area for the purpose of building a number of inorganic chemical plants.