Apollo to Buy Borden

In yet another chemical deal involving private equity firms, Apollo Management and Borden managers have agreed to purchase Borden Chemical from Kohlberg Kravis Roberts & Co. (KKR) for approximately $1.2 billion, including about $550 million of Borden's debt.

KKR had been planning an initial public offering of Borden stock for the third quarter of this year, having filed a registration statement with the Securities & Exchange Commission in May. With the sale to Apollo, also expected for the third quarter, the IPO has been canceled.

KKR purchased Borden Inc. in 1995 and subsequently sold off its dairy products, food, and other consumer products businesses. By 2002, the chemical business was all that was left.

Borden Chemical had sales of $1.4 billion in 2003. Some 53% of its revenues came from its forest products business, which makes urea-formaldehyde and phenolic binding resins for wood-based products. Its North American performance resins unit accounted for 25% of sales, and international sales made up the balance.

The business is being exchanged between financial buyers, and Borden's CEO, Craig O. Morrison, expects that little will change. "Given our operational momentum in recent years, we expect to continue with our current strategy and management team," he says.

KKR will maintain a chemical industry presence. It is buying Dynamit Nobel's chemical businesses for $2.7 billion and plans to merge the units with Rockwood Specialties, which it formed in 2000 out of businesses it had purchased from Laporte.

For Apollo's part, last month it agreed to purchase portions of Eastman Chemical's coatings, adhesives, specialty polymers, and inks segment for $215 million. Apollo also purchased the Resolution Performance Products epoxy resins business from Shell. In addition, Apollo is part of the group that bought Nalco Co.