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Bain Capital’s Styron Files for $400-Million IPO

3:18 PM MDT | July 11, 2011 | —Vincent Valk and Kerri Walsh

Pappas: Styron, soon Trinseo, seeks listing.

Styron has filed with U.S. regulators for a proposed initial public offering (IPO), seeking to raise as much as $400 million. The filing is under the name Trinseo, which will be the name of the company by the end of this year. The number of shares to be offered, price range, and timing have not been determined. Styron is controlled by private-equity firm Bain Capital (Boston), which purchased it from Dow Chemical last year for $1.63 billion. Bain currently owns 92% of Styron, Dow retains a 7% stake, and company management, led by CEO Chris Pappas, owns about 1%. Bain plans to list the company as Trinseo on a U.S. stock exchange.

Styron posted $5 billion sales in 2010, with net income of $56.7 million. Styrenics accounted for 38% of sales; styrene-butadiene latex, 30%; engineering plastics, 21%; and synthetic rubber was 11%. A majority of sales are in Europe and the Middle East, which accounted for 56% of sales in 2010. Asia was 24% of 2010 sales; U.S. and Canada, 15%; and Latin America was 5%. The company will use net proceeds from the IPO for debt repayment and general corporate purposes. It had about $1.4 billion borrowed under a term loan and $85 million borrowed under a credit facility as of April 22, according to the regulatory filing.

Styron’s growth strategy includes targeted capital investments and expansion of market share in emerging markets. The company recently announced plans for a solution styrene butadiene rubber (SSBR) production line in Schkopau, Germany, that is expected to come on-line in 2012, and expansion of latex production capacity in Zhangjiagang, China, also expected on-line in 2012. The company says it will also pursue acquisitions. “We believe that a long-term trend toward consolidation in our markets will continue, which given our scale and geographic reach, will create opportunities for our business,” Styron says.

Styron obtains 45%-50% of its raw materials from Dow, including benzene, ethylene, butadiene and bisphenol-A, according to the filing. Dow today supplies 100% of Styron’s benzene and ethylene under a 10-year contract. Pricing is tied to price indices for each region and includes large-buyer discounts. The company says it has the flexibility to buy 25% of its benzene from alternative sources. Styron says Dow is its largest butadiene supplier in Europe, but that it also has other supply sources. Butadiene supply in North America and Asia, apart from a transition period away from Dow in North America, is from third-party producers, Styron says.

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