InterviewUS Nexeo to focus on fundamentals versus M&A – CEO

23 June 2011 22:08  [Source: ICIS news]

Nexeo CEO David Bradley By Joseph Chang

NEW YORK (ICIS)--Newly independent US-based chemical distributor Nexeo Solutions will first focus on developing its business model and proposition rather than on mergers and acquisitions (M&A), its chief executive said on Thursday.

“We are very excited to be a stand-alone company focused exclusively on distribution and will spend 100% of our time, talent and resources on getting our value proposition right – using service as a differentiator,” said CEO David Bradley.

“We will first focus on developing this differentiated model before undertaking major M&A,” he added.

Nexeo Solutions launched on 1 April after the former Ashland Distribution business was acquired by global private equity firm TPG Capital for $979m (€685m).

While M&A will initially be on the back burner in terms of focus, Bradley did not rule out deals altogether.

“If we saw an opportunity where we could make a cash-flow accretive acquisition that would be a good fit, we would give it our full consideration,” Bradley said.

“But the reality is that we have a great core platform we can leverage right now. We want to leverage our strong supplier relationships to build up our market presence,” he added.

Nexeo had 2010 sales of $3.4bn, and it operates in three markets – chemicals, plastics and composites.

A key element of its business model will be differentiating its service offering, Bradley said.

“We will increase our technical aptitude in key markets so we can service customers as they grow,” said Bradley.

Being an independent company owned by private equity serves as an advantage, he noted.

“Private equity has the appetite to invest in a growing business that generates cash flow. As part of a larger company in the last five years, investment in the business was minimal,” Bradley said.

“Building supplier relationships, the asset base and service capabilities requires significant investment,” he added.

($1 = €0.70)

By: Joseph Chang
+1 713 525 2653

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