The Dow Chemical Company and Bain Capital Partners, a leading global private equity firm, announced jointly today that they have signed a definitive agreement under which Dow's Styron Division will be divested to an affiliate of Bain Capital for $1.63 billion. As part of the transaction, Dow has an option to receive up to 15 percent of the equity of Styron as part of the sale consideration. Additionally, the transaction includes several long-term supply, service and purchase agreements which will generate substantial value for both Dow and Styron.
With the purchase price and the significant long term contracts, Dow will be able to substantially deleverage and achieve an attractive value for the Styron divestment. The transaction is expected to close by August 2010, subject to completion of customary conditions and regulatory approvals.
"This transaction is yet another step in our disciplined approach to portfolio management, and is consistent with both the timeline and value we previously communicated for these assets," said Andrew N. Liveris, Chairman and Chief Executive Officer. "We are committed to further focusing our portfolio by shedding non-strategic assets that can no longer compete for growth resources inside the Company, and in the process generating funds for further debt reduction and liberating resources for Dow's higher growth, higher margin portfolio of technology, market driven businesses."
"We are delighted to embark on a long-term partnership with Dow," said Steve Zide, a Managing Director at Bain Capital. "Dow's culture of global excellence and integrity is well-represented in Styron and its people. We are greatly impressed by the exceptional quality of the Styron business, and look forward to working with our new partners to continue to grow and strengthen Styron's leadership position in the global marketplace."
As a standalone, privately held business, Styron will be a leading diversified chemicals and plastics company with attractive global positions in a related set of markets and a unique product portfolio with a large presence in the styrenics value chain. Styron brings together a balanced portfolio of plastics, rubber and latex businesses that share feedstocks, operations, customers and end users. The company will benefit from a leadership position in its two flagship products, polystyrene and latex, as well as global scale, unrivalled customer relationships, and a robust innovation pipeline.
Styron is expected to have approximately $3.5 billion in revenue (based on 2009 data), with 40+ manufacturing plants in all geographic regions, and approximately 1,900 employees. Its businesses serve a diverse customer base in markets such as automotive, appliances, packaging, paper & board, carpet, durables, electronics, optical media, tires, and technical rubber.
Businesses and products in Styron include: Styrenics - Polystyrene (PS), acrylonitrile butadiene styrene (ABS), styrene acrylonitrile (SAN) and expandable polystyrene (EPS); Emulsion Polymers (paper and carpet latex); Polycarbonate (PC) and Compounds & Blends; Synthetic Rubber; and Automotive Plastics including PULSE™ engineering resins, MAGNUM™ acrylonitrile butadiene styrene, INSPiRE™ performance polymers, and VELVEX™ reinforced elastomer. Also included will be some styrene monomer assets.
Dow announced its plan to form Styron and explore divestiture options in July 2009.
Polycarbonate (PC) is an engineering thermoplastic used in applications such as optical media, electrical and lighting. Styrenic plastics (polystyrene, ABS, and SAN) are well known for their performance in an array of applications from packaging and food service, to large appliances, portable appliances, consumer electronics, automotive and building and construction. Synthetic rubber is used in a broad portfolio of products from tires to hoses, conveyor belts, and footwear to specialized high performance elastomers. Expandable polystyrene (EPS) is typically used in rigid foam products such as heat insulation, packaging, impact sound insulation and drainage. SB and SA Latex are used in the paper/paperboard and flooring applications. Automotive plastics are used in many different automotive applications, such as instrument panels, mid consoles, door panels, interior trim, seat structures and bumpers.