US Ashland may sell UPR business, German BDO plant

Source: ICIS News

2018/03/20

HOUSTON (ICIS)--Ashland is considering selling a butanediol (BDO) plant in Germany as well as its Composites segment, which makes unsaturated polyester resins (UPR), the US-based fine-chemicals producer said on Tuesday.

If Ashland decides to sell the plant and the segment, then it expects to sign an agreement by the end of 2018, the company said. Citi is helping Ashland during the strategic review process.

The BDO plant is in Marl, Germany. Ashland plans to keep its BDO plant in Lima, Ohio, to ensure consistent supplies for internal use, the company said.

The sale is among the strategic alternatives that Ashland is considering for the German plant and its Composites segment. If Ashland does pursue the divestment, it would be left with two segments: Specialty Ingredients and Intermediates and Solvents.

Intermediates and Solvents makes BDO, tetrahydrofuran and n-methylpyrrolidone.

Specialty Ingredients makes a lot of chemicals used in cosmetics, food, pharmaceuticals, adhesives and coatings. Many of these are natural, synthetic and semisynthetic polymers derived from cellulose ethers, vinyl pyrrolidones, acrylic polymers, polyester and polyurethane-based adhesives, and plant and seed extracts.

Ashland said the possible sale of the Composites segment will allow it to focus on specialty ingredients, which should provide the company with higher margins. If Ashland does go forward with a sale, it would use most of the proceeds to pay down debt and repurchase shares.

"The decision to explore strategic options for these assets is consistent with Ashland's vision of creating the premier specialty chemicals company," said Bill Wulfsohn, Ashland CEO. "Given the strong performance of these businesses, as well as recent tax reform changes, we believe it is the right time to initiate this review."

Ashland's Composites segment produces mostly UPRs, which accounted for 83% of the segment's sales during the fiscal year of 2017. UPRs are made with maleic anhydride (MA), phthalic anhydride (PA), propylene glycol (PG) and other glycols. The resins are often combined with material like fibreglass to make composites.

The Composites segment also makes epoxy vinyl ester resins as well as gelcoats.

The segment operates throughout the Americas, Europe and Asia Pacific, with 14 plants in seven countries.

In the US, these are in Fort Smith and Jacksonville, Arkansas; Commerce, California; Bartow, Florida; Neville Island and Philadelphia, Pennsylvania; and Neal, West Virginia.

In Europe, the segment has plants in Porvoo, Finland; Etain, France; Miszewo, Poland; and Benicarlo, Spain.

It also has a plant in Aracariguama, Brazil, and two facilities in Changzhou, China.

The segment makes products at two plants in Saudi Arabia under a joint-venture agreement.