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Chemical Firms Sell Businesses In Wave Of Divestitures

Restructuring: Dow, Chemtura, and Clariant find buyers for businesses that no longer fit

by Alexander H. Tullo
October 18, 2013 | A version of this story appeared in Volume 91, Issue 42

The pace of deal-making slowed in the first half of 2013. NOTE: Data are for announced chemical deals worth more than $50 million. SOURCE: PricewaterhouseCoopers
A bar graph shows that the number of deals has dropped in Q1 and Q2 of 2013.
The pace of deal-making slowed in the first half of 2013. NOTE: Data are for announced chemical deals worth more than $50 million. SOURCE: PricewaterhouseCoopers

After a lackluster first half, the chemical industry has picked up the deal-making pace. As part of the activity, three companies have signed agreements to divest businesses that don’t align with their corporate goals.

In recent days, Dow Chemical agreed to sell its polypropylene catalyst division to W.R. Grace, Chemtura said it will sell its consumer products business to KIK Custom Products, and Clariant signed a deal to sell its detergents and intermediates business to International Chemical Investors Group (ICIG).

The catalyst unit, which Dow acquired with its 2001 purchase of Union Carbide, is going for $500 million. The deal includes its Unipol polypropylene technology and a polypropylene catalyst business. Grace will combine them with its existing polyolefin catalyst operation.

Chemtura is selling its cleaning products business, which includes swimming pool chemicals and household cleaners, to Canada’s KIK for $315 million. The unit had operating profits of $30 million on $433 million in sales last year.

Chemtura is also seeking to sell its agricultural chemical business, which makes fungicides, insecticides, and herbicides and earned $77 million on $435 million in sales during the past 12 months. The company says it wants to focus on core businesses such as brominated, organometallic, and urethane chemicals.

Meanwhile, Clariant’s detergents and intermediates business, which operates primarily in France and Germany, is being sold for $64 million. ICIG says the business will go well with the hydrotropes and sulfonation business of its Nease Corp. subsidiary.

After a slow start to 2013, the number of chemical deals is on the rise, says Christopher D. Cerimele of the investment banking firm Grace Matthews. “In general, there is a fair amount of housecleaning going on by big chemical companies.”

Cerimele sees a seller’s market for such businesses. Financing is readily available for private-equity buyers, and the balance sheets at strategic buyers are strong. “Companies are taking advantage of this and pruning their portfolios,” he says.



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