Trinseo will sell rubber business to Synthos

Another long-time synthetic rubber producer is exiting the business. The styrenic polymer maker Trinseo has agreed to sell its synthetic rubber unit to Polish competitor Synthos for $491 million, including about $42 million in pension liabilities.

The Trinseo business had sales last year of $320 million. The unit’s manufacturing, R&D, and most of its 440 employees are located in Schkopau, Germany.

Some two thirds of the business’s sales come from solution-polymerized styrene-butadiene rubber (SSBR), a premium grade of rubber used in fuel-efficient tires. Trinseo also makes emulsion styrene-butadiene rubber. It shuttered polybutadiene rubber capacity late last year.

The transaction is the second recent strategic move for Trinseo. Earlier this month, the US company completed the $1.4 billion purchase of Arkema’s polymethylmethacrylate business. Through the two deals, Trinseo is hoping for stronger, and more stable, profits. The rubber unit earned $41 million before taxes in 2019 but only $2 million last year.

“This should bolster margins and reduce volatility,” Jefferies Financial Group stock analyst Laurence Alexander writes in a note to clients.

Synthos, which has annual sales of roughly $2 billion, makes a slate of synthetic rubbers similar to Trinseo’s. The company says the acquisition will broaden its geographic reach and add higher-end products. Synthos projects that merging the two businesses will unlock $25 million in annual cost savings.

Japan’s JSR inked a similar agreement earlier this month when it announced plans to transfer its synthetic rubber business to the Japanese refiner Eneos for about $1 billion. That business, which generates about $1.3 billion in annual sales, is also primarily an SSBR producer. JSR is divesting the business so it can focus on electronic materials and life sciences.

For Eneos, the purchase is a way to diversify away from fuels and into chemicals, where it sees better growth prospects. “Eneos expects tires to be needed regardless of changes in power sources and forms,” the company says. A similar motivation drove the Saudi oil company Saudi Aramco to fully purchase Lanxess’ synthetic rubber business, now called Arlanxeo, in 2018.