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New chemical firms debut on the New York Stock Exchange

Activist investors played a behind the scenes role in formation of two new specialty chemical firms

by Marc S. Reisch
October 5, 2016 | APPEARED IN VOLUME 94, ISSUE 40

Credit: AdvanSix
Credit: AdvanSix

Two products of corporate spin-offs, Versum Materials and AdvanSix, debuted on Oct. 3 as independent chemical firms trading on the New York Stock Exchange. On the same day, a third chemical maker, Ashland, launched an identity campaign after the spin-off of its Valvoline automotive oil change business.

Activist investors played a hand in the separation of Versum from Air Products & Chemicals and the orientation of Ashland as a specialty chemicals-focused entity. Honeywell, in contrast, acted on its own to create AdvanSix as a way to exit the nylon 6 business years after competitors DuPont and Solutia sold their ailing nylon arms.

Credit: Versum Materials
Credit: Versum Materials

Versum CEO Guillermo Novo says the launch of his firm creates a “focused pure-play in the semiconductor industry,” with $1 billion in annual sales and 1,900 employees. Originally, Versum was to include businesses in epoxy curing agents and polyurethane additives, but they were sold to Evonik Industries in May for $3.8 billion.

The spin-off of Versum can be traced back to activist investor William Ackman of Pershing Square Capital Management, who took a 10% position in Air Products in 2014 and pushed it to maximize shareholder value.

Credit: Ashland
Credit: Ashland

Ashland too embarked on a program to improve shareholder value after activist investor Jana Partners took a 7% stake in the firm in 2014. The plan to hive off Valvoline was hatched the following year. It was completed on Sept. 28 when Ashland sold a 17% stake in the oil change firm and raised more than $750 million.

The separation of Valvoline concludes a journey for Ashland from a regional oil refiner to a specialty chemicals firm that aims to derive 30% of sales from new and patent-protected products, senior vice president Louis Fernandez-Moreno tells C&EN. The firm now hopes its rebranding effort will more closely identify the Ashland name with chemicals and materials for personal care, pharmaceuticals, and construction.

Although Honeywell didn’t spin off AdvanSix under activist investor pressure, it did cite shareholder value as one reason motivating the move. As a standalone business, AdvanSix will have the “flexibility to pursue growth strategies… and serve our customers with agility,” CEO Erin Kane says.



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