The engineering polymer industry is starting to look like a used-car lot. Earlier this month, DuPont said it is seeking a buyer for its engineering polymer business, which has annual sales of $4.2 billion. And in September, DSM announced that it is looking to divest its materials business, a polymer maker with $1.9 billion in annual sales.
Annual sales: $1.9 billion
Major products: Specialty nylon copolymers, ultrahigh-molecular-weight polyethylene fiber
Annual sales: $4.2 billion
Major products: Nylon, polybutylene terephthalate, polyacetal
Annual sales: ~$1 billion
Major products: Nylon, polybutylene terephthalate, thermoplastic composites
Annual sales: ~$1.5 billion
Major products: Styrene and polystyrene
Sources: Companies, C&EN estimates. Note: Trinseo’s sales do not include its stake in the Americas Styrenics joint venture.
Two more polymer businesses may now be hitting the market. Lanxess says it is separating its high-performance materials business as a stand-alone company. That kind of maneuver is often preparation for a sale. And Trinseo says it will launch a process early next year to sell its polystyrene business.
The proposed separation and divestments reflect a dynamic merger and acquisition market and some companies’ desire for more narrow portfolios focused on businesses with bright prospects.
Lanxess, the most recent firm to make its announcement, is taking the step after several acquisitions in biocides and preservatives. The stand-alone, high-performance polymer company will make polybutylene terephthalate, nylon 6 and 6,6, and thermoplastic composites. These polymers make up most of Lanxess’s engineering materials unit, which had $1.4 billion in sales for the first 9 months of this year. The unit also makes urethane systems.
The company won’t say whether it is pursuing a sale, but carving out a business into a separate legal entity often presages a divestiture. Lanxess itself was detached from Bayer in 2004 before being spun off completely in 2005. And Lanxess used a similar strategy in 2016, forming the Arlanxeo synthetic rubber joint venture with Saudi Aramco before selling its stake to its partner 2 years later.
The Trinseo assets on the block include its European styrene operations and a polystyrene business that supplies the polymer in Europe and Asia. These units generated combined sales of about $1.1 billion in the first 9 months of 2021, about 30% of Trinseo’s total. Also for sale is Trinseo’s stake in Americas Styrenics, a polystyrene joint venture with Chevron Phillips Chemical.
Trinseo has been aggressively reorganizing its portfolio. In May, it completed the $1.4 billion acquisition of Arkema’s acrylic resin business, which it hopes will pair well with its businesses in high-end styrenics such as acrylonitrile-butadiene-styrene. In September, Trinseo bought the acrylic-sheet maker Aristech Acrylics. It is also selling its synthetic rubber business to Polish competitor Synthos.
Chris Cerimele, managing partner of the investment bank Balmoral Advisors, says divestments are now often guided by deconglomeration—the process by which companies focus on a single sector rather than many. Just this month, General Electric said it was splitting into three companies focused on aviation, energy, and health care.
This drive to deconglomerate is also top of mind for the firms selling polymer businesses. DSM, for instance, aims to concentrate on nutritional ingredients. “They’ve been migrating away from specialty materials for years,” Cerimele says of DSM. “This would be an endgame for them.”
Moreover, the M&A market is hot, and assets are commanding high prices. “It’s kind of a seller’s market right now,” Cerimele says. “People are taking advantage of strong valuations and strong industry demand.”