US Chemtura to sell consumer unit, mulls sale of agchem business

10 October 2013 22:30  [Source: ICIS news]

US Chemtura to sell consumer unit, mulls sale of agchem businessHOUSTON (ICIS)--US based specialty chemicals producer Chemtura has signed a stock-purchase agreement to sell its Consumer Products business to KIK Custom Products for $315m (€233m), the company said on Thursday.

In addition, the company is considering the sale its agrochemicals business, Chemtura AgroSolutions.

The two businesses made up 32% of the company's revenue and 28% of its operating income in 2012.

Chemtura is pursuing the deals for its shareholders, the company said. In fact, it intends to reward shareholders with a large portion of the proceeds.

However, the deals should also allow Chemtura to focus on becoming a pure-play industrial specialty chemicals company, it said. It plans to use the proceeds to grow its two remaining businesses, Industrial Performance Products and Industrial Engineered Products.

In addition, it will also pay down debt so it can reach a leverage target of two times adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), it said.

"Today’s announcements represent the next step in our plan to simplify and transform our portfolio, positioning us to better benefit from secular industry growth trends in our chosen areas of market focus and create a sustainable competitive advantage,” according to a statement by CEO Craig Rogerson.

The Consumer Products business produced chemicals used in pools and spas. In 2012, it reported an operating income of $30m on sales of $433m.

The Consumer Products sale should close on 31 December, pending regulatory approval, said KIK, a portfolio company of private-equity firm CI Capital Partners.

KIK had entered the pool business in 2011 when it acquired Chem-Lab Products.

Chemtura's Agrichemical division products fungicides, herbicides and insecticides. It reported an income of $65m on sales of $409m in 2012.

Chemtura other unit, Industrial Performance Products makes petroleum additives and urethanes. In 2012, the unit reported an operating income of $102m on sales of $891m.

Industrial Engineered Products makes bromine-based products and organometallics. It reported an income of $140m on sales of $896m.

Those two businesses stand to benefit from several long-running trends. Demand for lubricant additives is expected to rise because of stricter fuel-efficiency standards for automobiles.

($1 = €0.74)

By: Al Greenwood
+1 713 525 2645

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index