Borden buys German plastics firm
Byline: Andrew Bulkeley in Berlin with David Carey in New York
German mining and chemicals group RAG AG on Thursday, Oct. 7, agreed to sell its Bakelite GmbH plastics division to private equity-backed Borden Chemical Inc. as it nears the end of a selloff to fund a foray into properties and chemicals.
Borden will pay $215 million to $245 million “net” for Iserlohn-Letmathe, Germany-based Bakelite, depending on the future performance of the company, said a Borden spokesman. A source familiar with the transaction put the purchase multiple at 4 times Ebitda, after taking into account anticipated cost savings.
Apollo Management LP, a New York buyout firm led by financier Leon Black, completed a $1.2 billion acquisition of Borden on Aug. 12, investing $280 million for more than a 90% equity stake. The Columbus, Ohio-based producer of resins, adhesives and formaldehyde was sold by rival buyout shop Kohlberg Kravis Roberts & Co.
Bakelite, which makes phenolic and epoxy thermosetting resins and molding compounds, had $610 million in sales last year. It operates 13 manufacturing plants in Europe and Asia and has 1,700 employees. Nearly a century ago, it was the first company to make fully synthetic plastic.
Craig Morrison, president and CEO of Borden, which reported 2003 sales of $1.4 billion, said the company considers Bakelite a “strategic investment” that will boost its international operations, particularly in Europe and Asia.
J.P. Morgan Chase & Co. advised RAG. Dresdner Kleinwort Wasserstein advised Borden. Credit Suisse First Boston and J.P. Morgan Chase, which provided a credit package for the Borden buyout, will supply debt financing for the Bakelite purchase.
Private equity shops have been picking over RAG’s assets this year as it works to pay down [Euro]1.9 billion ($2.3 billion) in debt amassed largely through the purchase of a 50.1% stake in specialty chemicals group Degussa AG.
In May, the group sold most of its U.S. assets to a consortium including Blackstone Group LP, First Reserve Corp. and American Metals & Coal International Inc. It peddled its Isola GmbH printed circuit board maker to a consortium led by Texas Pacific Group and Lake Forest, Calif.-based Redfern Partners in June. After abandoning the sale of coal-fired electricity maker Steag AG earlier this year, the Essen, Germany-based company has only its HT Troplast AG plastics division on the block, though it’s expected to bring in less than Bakelite.
COMPANY: RAG AG
COMPANY: Borden Chemical Inc.
COMPANY: Apollo Management LP
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