UpdateUS Chemtura received interest for agchem unit

10 October 2013 23:43  [Source: ICIS news]

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HOUSTON (ICIS)--Chemtura had received unsolicited interest for its agrochemical segment, the US-based specialty chemical producer said on Thursday.

Chemtura is considering selling the business, called Chemtura AgroSolutions, and it has retained Morgan Stanley as a financial advisor, the company said.

It does not have any timetable for when a sale could happen, said Craig Rogerson, CEO. He made his comments during a conference call.

In addition, the company will not sell the business if it cannot get a good price for it.

Chemtura is considering the sale of its agrochemical segment in part because it is a sellers' market for such businesses, Rogerson said. "It's no surprise that we received interest."

Population growth is exceeding that for arable land, he said. Meanwhile, diets and standards of living are improving around the world.

Meanwhile, demand is increasing for non-food crops, Rogerson said.

These trends all benefit agrochemicals.

Earlier, Chemtura said it has signed a stock-purchase agreement to sell its Consumer Products business to KIK Custom Products for $315m (€233m).

Consumer Products and Chemtura AgroSolutions make 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 produces fungicides, herbicides and insecticides. It reported an income of $65m on sales of $409m in 2012.

One of Chemtura's two remaining units, Industrial Performance Products makes petroleum additives and urethanes. In 2012, the unit reported an operating income of $102m on sales of $891m.

The other unit, 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

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