French industrial chemicals company Arkema is shopping its tin stabilizer business to suitors including private equity firms, according to a source who has looked at marketing materials for the asset.
The tin stabilizer business, housed in Arkema’s “functional additives” business, provides chemicals that are added into polyvinyl chloride, or PVC products, such as pipes, cables or siding used in construction. The tin stabilizer business generated about €175 million ($230 million) in revenue last year, and about €10 million in EBITDA, the source said. The unit is based in King of Prussia, Pa., but has global operations.
The sale process comes as Arkema focuses on its most profitable businesses. In November, it agreed to divest its vinyl products division to The Klesch Group, a Swiss investment firm, so that it could concentrate on its industrial chemicals and performance products businesses. In that deal, Arkema said the vinyl business, which suffered amid the downturn in the European construction market, was no longer profitable and actually paid Klesch €100 million to take it off its hands, according to published reports. Last month, Arkema reported that its profit rose 28 percent to more than €1 billion in 2011, while its fourth-quarter sales rose 17 percent to €1.4 billion, according to sister news wire service Reuters.
The Valence Group, a boutique investment bank with offices in London, New York and Shanghai that specializes in the chemicals and materials sectors, is managing the sale. The process has been going at least since late last year, according to the source.
Valence Group’s past clients have included TA Associates, SK Capital Partners and Castle Harlan Inc., according to Capital IQ. Early last year, it advised Cytec Industries Inc. in its sale of its building block chemicals business to H.I.G. Capital LLC in a deal valued at $180 million.
Many private equity firms are looking to European companies for deal opportunities as they continue to adjust to a challenging economic environment. In the last year, private equity firms raised $23 billion to buy distressed European assets, the New York Times reported March 27, citing data from Preqin. Marlin Equity Partners, a Hermosa Beach, Calif.-based shop, is in the process of establishing an office in London so it can capitalize on deals in Europe, as Buyouts reported April 10. Arkema, in announcing its 2011 financial results last month, said that Europe should remain challenging, particularly in the construction industry.
Carve-outs from companies accounted for about 18 percent of the U.S.-based sponsor-backed deals closed in the first quarter as of March 21, a slight increase from 16.7 percent of all deals in 2011, according to data from Thomson Reuters and Buyouts.
Executives in Arkema’s communications department did not respond by deadline to calls seeking comment. An executive with Valence Group declined to comment.