23:39 PM | June 27, 2014 | Robert Westervelt
Univar, the largest US chemical distributor, filed Friday with the US Securities and Exchange Commission (SEC) for an initial public offering (IPO). The number of shares and price range for the offering have not yet been determined. Proceeds will be used to repay long-term debt, Univar says.
Univar, which posted 2013 sales of $10.3 billion, holds the leading chemical distribution market position in North America and the number two market position in Europe. Brenntag, with 2013 revenues of €9.8 billion ($13.4 billion), is the largest global chemical distributor. The United States and Canada accounted for 73% of Univar's 2013 sales, and Europe, Mideast and Africa was 22%. Univar’s 2013 sales were up 5.9% from the prior year, according to the SEC filing. Excluding the impact of acquisitions, pricing and product mix increased net sales by 0.2%, Univar says. The company posted a 2013 net loss of $82.3 million, compared with $197.4 million in 2012. Univar’s operating income in 2013 was $223 million, up 2.2%. Univar’s long-term debt was at $3.9 billion as of 31 March.
Clayton, Dubilier & Rice (CD&R) and CVC Capital Partners each own approximately 40% of Univar, according the filing. Other equity investors include Parcom, Highbridge Capital Management, Apollo Global Management, Blackstone and company management. Univar shelved plans for a $863-million IPO in 2010 after CD&R acquired a 42.5% stake in the company for $1.8 billion.
Distribution should continue to grow faster than the broader chemical industry, Univar says. The size of the addressable market for chemical distributors, which excludes chemicals delivered through pipelines, to be $2.3 trillion, of which $223 billion, or 9.7%, is funneled through approximately 10,000 third-party chemical distributors, according to the SEC filing. “Between 2008 and 2013, overall chemical consumption grew at a 4.4%/year,” Univar says. “As a result of the increased use of chemical distributors, which grew from 9.1% of the addressable chemical distribution market in 2008 to 9.7% in 2013, the amount of chemicals funneled through distributors grew at a 6.5%/year. As this trend continues, the global chemical distribution market is expected to expand at a 5.6%/year through 2018, which we expect will continue to outpace overall growth in the chemical industry.”
Dow Chemical represented 12% of Univar's 2013 chemicals expenditures with no other chemical makers accounting for more than 10%, according to filing. Univar’s 10 largest producers accounted for approximately 37% of total chemical expenditures.
The filing indicates that Univar has overhauled management since the appointment of president and CEO Erik Fyrwald in May 2012. The company says 12 of its top 18 executives have joined since Fyrwald’s appointment. Fyrwald was formerly president and CEO of Nalco Holding and president of Ecolab, and previously held senior positions at DuPont.
Deutsche Bank, Goldman Sachs. and BofA/Merrill Lynch are serving as the lead book-running managers, according to the filing. Univar relocated its headquarters to Downers Grove, IL, from Redmond, WA last year.