AZ Electronic Materials Plans Initial Stock Offer

Taking advantage of rapid recovery in the consumer electronics market, specialty chemicals maker AZ Electronic Materials plans to make an initial public offering (IPO) of stock on the London Stock Exchange. The company expects to raise $400 million in the process.

AZ started out as part of the German chemical maker Hoechst, where in 1957 it developed the first positive photoresist for integrated circuit manufacturing. In 1997, Hoechst sold AZ to the specialty chemical supplier Clariant. In 2004, Clariant sold the company to the Carlyle Group, a private equity firm, for $415 million.

Today, Carlyle and Vestar Capital Partners each own 41.8% of AZ, which had sales in its last fiscal year of $611 million. AZ says proceeds from the IPO will strengthen its ability to attract the best talent, help repay debt, and allow shareholders to realize part of their investment.

AZ started pursuing an IPO in earnest in February when electronics industry veteran Geoff Wild was brought in as CEO, according to Mark Thirsk, managing partner of Linx Consulting, which follows the electronic materials industry. Thirsk expects a 20% stake in the company to be sold, valuing it at close to $2 billion overall.

Thirsk and colleague Mike Corbett credit AZ's private equity owners with shifting the firm's focus from photoresists toward ancillary materials such as etch layers, topcoats, and antireflective coatings. "They got off the treadmill of developing leading-edge photoresists and developed a broader portfolio that has performed well," Thirsk says.

AZ is smaller than electronic materials leaders such as Dow Chemical, Air Products, and JSR, but having stock as currency can help it grow by acquisition, Corbett notes.