Exclusive: Kraton in talks to acquire Arizona Chemical - sources
Monday, September 28, 2015
Kraton Performance Polymers Inc (KRA.N), which makes rubbers used in adhesives, coatings and personal care products, has offered to acquire pine chemicals producer Arizona Chemical Company LLC, in a deal that could exceed $1.2 billion, including debt, according to people familiar with the matter.
Kraton is competing in an auction for Arizona Chemical against private equity firm Advent International Corp, the people said on Friday. Buyout firms Bain Capital LLC and Apollo Global Management LLC (APO.N) also expressed interest in Arizona Chemical at an earlier stage, the people added.
Arizona Chemical's majority owner, private equity firm American Securities LLC, is expected to make a decision about the sale of the company in the coming days and there is no certainty that Kraton will prevail, the people cautioned.
An acquisition of Arizona Chemical would significantly enlarge Kraton, which has a market capitalization of about $576 million. If Kraton clinches a deal, it plans to issue new shares to help fund the deal, the people said.
The sources asked not to be identified because the talks are confidential. American Securities, Advent, Bain and Apollo declined to comment. Kraton and Arizona Chemical did not respond to requests for comment.
Arizona Chemical, based in Jacksonville, Florida, makes pine chemicals used in fragrances, plastics and household cleaners. It has chemical manufacturing plants in the United States, Britain, France, Germany, Sweden and Finland.
Arizona Chemical was founded in 1930. It was sold to American Securities in 2010 by buyout firm Rhone Capital LLC for just over $790 million, including fees and expenses. Rhone Capital retained a 25 percent stake in the company.
Houston-based Kraton makes engineered polymers used in personal care products, sealants and lubricants, and medical, packaging, automotive, paving, roofing and footwear products.
It manufactures its products at a facility in Belpre, Ohio, as well as in Germany, France, Brazil and Japan.
Production issues at its German plant and a delayed restart following a major turnaround at its French facility weighed on Kraton's second-quarter earnings. It reported a net loss of $5.6 million, versus an $11.1 million net profit a year ago.
(Reporting by Greg Roumeliotis and Mike Stone in New York; Editing by Richard Chang)