HOUSTON (ICIS)--Univar is considering divesting Nexeo Solutions’ plastics business as part of the companies' $2bn acquisition deal out of a desire to stay focused on chemicals and ingredients distribution, the US-based company's CEO said on Monday.
“We are going to have the comprehensive strategic review to look at the alternatives there,” Univar CEO David Jukes said. “But really we haven’t been in plastics, and we haven’t been in plastics because we’ve chosen not to be in plastics.”
Nexeo’s plastics business distributes prime thermoplastic resins and other products globally for original equipment manufacturers (OEMs), moulders and design firms.
The plastics distribution business makes up about half of Nexeo’s $4.0bn in sales in the last 12 months by segment (chemicals being a close second). Univar noted the plastics business makes up less than 10% of the combined company earnings before interest, tax, depreciation and amortisation (EBITDA) of $843m.
With Nexeo’s plastics business comprising about a third of total EBITDA of $208m in the last 12 months, its estimated EBITDA is about $69.3m.
And there is very little overlap between the chemicals and plastics distribution businesses of Nexeo, leaving little chance for “dis-synergies”.
Only 1-2% of overlap exists between plastics and chemical customers for Nexeo, Jukes said.
“The question really is: Are we the right home for this fantastic plastics business?” he said. “Because it would be a dreadful shame if it just sat for us as a non-core business, and missed out on the opportunities that are there.”
Univar noted Nexeo Plastics executive vice president Shawn Williams will continue to run the plastics business for the time being.