Private Equity: Arizona Chemical Will Change Hands To American Securities

In another case of dealing between private equity firms, Rhône Capital is selling a controlling interest in pine-based chemicals maker Arizona Chemical to American Securities, the New York City-based company that bought inorganics maker General Chemical last year.

Terms of the deal for Arizona, the former chemicals unit of International Paper, aren’t being disclosed. Rhône and Arizona management will retain a 25% interest in the company, which generated about $770 million in sales last year.

In April, Arizona filed for an initial public offering (IPO) of stock, but it hasn’t canceled the offering despite the impending sale. “We will keep our filing current for now and let the new owners decide whether to continue or not,” says Arizona spokesman David Cowfer.

Chemical distributor Univar postponed an IPO last month when its owner, CVC Capital Partners, announced that it would sell a 42.5% interest to another private equity firm, Clayton, Dubilier & Rice.

The past year has seen bustling IPO activity for private-equity-owned firms. Univar rival Brenntag raised more than $900 million in an IPO. Elastomers maker Kraton Performance Polymers floated $140 million in stock.

Paul de Janosi, global head of private equity at Celerant Consulting, says private equity funds that raised money from investors between 2004 and 2006 are nearing the end of their investment cycles and are aiming to provide returns to investors and to restructure debt.

Transactions between two private equity firms often indicate that the funds are at different stages of their investment cycles. In addition, de Janosi says, the acquiring firm “may have a different thesis about merging or breaking up” the company that it is buying.