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Momentive launches initial public offering

Silicones maker sees a business turnaround ahead

by Alexander H. Tullo
November 8, 2017 | A version of this story appeared in Volume 95, Issue 45

A photo of Momentive's R&D facility in Charlotte, N.C.
Credit: Momentive
Momentive opened this tire R&D facility in Charlotte, N.C., earlier this year.

After a few rocky years, Momentive Performance Materials has launched an initial public offering of stock set to raise more than $350 million for itself and major shareholders.

The silicone maker’s shares will soon start trading on the New York Stock Exchange under the ticker symbol MPMH. The company itself will issue $250 million worth of shares, while major shareholders will float about $100 million worth.

Overall, the offering will give Momentive a market capitalization of about $1.4 billion. It will trim the stake of the company’s largest shareholder, the private equity firm Apollo Management, from 40% to 27%.

Momentive is the world’s third-largest producer of silicones and silanes after Dow Corning and Wacker Chemie. It had sales of $2.2 billion in 2016 but generated an operating loss of $23 million.

Performance additives, a business that supplies silane crosslinkers and additives for personal care products and urethanes, comprised 68% of Momentive’s sales.

The company’s NXT silanes, which are used with silica fillers in fuel-efficient tires, are part of this business. The company is spending $30 million to expand its Leverkusen, Germany, NXT plant, and recently purchased Sea Lion Technology, which had been making the product under contract.

Silicones make up another quarter of Momentive’s sales. This unit manufacturers GE-branded sealants and caulks. The balance of its sales come from quartz.

The company was General Electric’s silicones business until Apollo purchased it in 2006 for $3.2 billion. It was set to merge with sister company Momentive Specialty Chemicals, now Hexion, and go public, but that plan was canceled in 2012.

Unable to keep up with its large debt burden, Momentive Performance Materials entered bankruptcy brieflyin 2014.

CEO John G. Boss, however, contends that Momentive’s fortunes are turning around. The firm just wrapped up a restructuring program that is set to save $48 million annually.

Momentive will use the proceeds from the IPO to pay down debt.



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