Buyers In Talks For Chemtura

MONTHS AFTER it put itself up for sale, Chemtura may have found a buyer. According to industry reports, private equity firms Apollo Management and Blackstone Group are negotiating to buy the beleaguered specialty chemical firm.

At press time, the two investor groups were said to be negotiating a price and arranging for financing. However, many details still must be worked out, and the talks could fall apart. All parties involved in the negotiations are playing things close to the vest. "We have nothing to announce at this point," a Chemtura spokeswoman says. Apollo and Blackstone also declined to comment.

One stock analyst, who asked not to be identified, notes that if Blackstone and Apollo succeed in working out a purchase, Chemtura would gain access to the management network of two seasoned deal makers. Both private equity firms have successfully bought and sold chemical firms in the past. Blackstone, for instance, had a hand in the purchase and subsequent sale of both Celanese and Nalco. Apollo was part of the group that bought Nalco, and last year it purchased GE's silicones business.

"There are a lot of assets that could be sold," the analyst says. Although the tight credit markets have slowed private equity deals recently, he says the approach taken by Blackstone and Apollo may be a harbinger of a new strategy by private equity firms: smaller deals and more tag-teaming.

Chemtura put itself up for sale in December. Then, earlier this year, it sold its oleochemicals business to PMC Group and its fluorochemicals business to DuPont. Last month, after announcing paltry earnings of $23 million on sales of $909 million in the first quarter of this year, Chemtura CEO Robert L. Wood, voiced his resolve to continue efforts to shore up the firm. "Our businesses remain focused on tightly managing the impacts of raw material cost increases and improving manufacturing operations," he said.

If Chemtura does not succeed in reaching a deal with the two private equity buyers, stock analyst Dmitry Silversteyn of Longbow Research says he sees no reason why the company can't continue on its own. But it needs to continue streamlining product offerings. "Chemtura looks too much like a conglomerate," he says.