Ciba Sells Polymers Business to Investment Banker
"Ciba has successfully restructured the Performance Polymers division and has now found a strong new partner to take over the business," says Ciba Specialty Chemicals chairman/CEO Rolf A. Meyer.
"The Performance Polymers division is a high quality branded asset with top-line growth potential driven by its leading technological position," says MGPE CEO Graham Hutton. "It is one of the world's top three epoxy resins manufacturers and has strong positions in specialty applications such as advanced tooling, adhesives and photo polymers."
MGPE will appoint Karl-Gerhard Seifert, former Clariant CEO and head of MGPE's German Private Equity team, as nonexecutive Chairman of the Performance Polymers business. Seifert, who left Clariant last April, was a key figure in that company's unfulfilled plan to merge with Ciba.
Seifert plans to grow the business through a combination of internally generate growth and acquisition. "The financing package we have put together provides a solid platform from which to grow the business as an independent entity outside Ciba," he notes. He will run the business, which employs 3100 worldwide, from its headquarters in Basel, Switzerland.
Despite restructuring to reduce costs and concentrate on higher-value-added resins, Ciba Performance Polymers has had a rough year. During the first nine months of 1999, sales fell nearly 8%, to $861 million, on volume declines as Ciba pulled back from low-margin businesses. While the company has reduced costs, margins are running about 1% lower than during 1998. The company sales October and November sales figures show the business is turning around.
Ciba Performance Polymers markets products in five business segments:
- Coating systems. Ciba Araldite resins and hardeners are used to formulate paints, liquid and powder coating systems, and construction chemicals. They are used in to protect everything from construction (steel and concrete) and automobiles to beverage and food can linings and watercraft. They are also used in adhesives, fiber sizing, and paper treatments.
- Resins. Advanced polymers include high-temperature Rhodeftale polyamide-imide (PAI) resins for nonstick kitchenware coatings, electrical wire, and industrial cutting tools; and Araldite epoxy matrix systems for composites in aerospace, sporting goods, and printed wiring board (PWB) laminates.
- Electronic Materials. Ciba makes a broad range of products. These include Probimer solder masks and coatings for PWBs; Probimage liquid resists and Optimer and Probelec photopolymers for PWB production; Arathane polyurethane and Araldite and Cemtronic fast-cure epoxy encapsulants; Epibond adhesives
- Heavy Electrical. Araldite epoxies for electrical insulating components are the key offering of this business.
- Adhesives/Tooling A broad range of epoxy, polyurethane, and rapid prototyping resins are the basic offerings among a very wide range of resins developed for the foundry and automotive industries.
"This move also underscores Ciba's strategy to focus its portfolio on specialty chemicals rather than specialty materials," says Ciba Specialty Chemicals chairman/CEO Rolf A. Meyer. The company bolstered its water treatment business through the April 1998 acquisition of Allied Colloids.
Ciba had sales of more than $5.2 billion in 1998. The company's main businesses include plastic and process additives; dyes and pigments for textiles, inks, coatings, and plastics; and consumer laundry, cleaning, and personal care products.
Morgan Grenfell Private Equity is a leading European private equity house with $1.8 billion in funds under its management. Its strategy is to acquire controlling stakes in quality companies with a high growth potential. Since its inception, MGPE has made 47 investments with a total enterprise value of $9 billion.
Recent high profile transactions include investments in Formula One Holdings and Piaggio & C. SpA, the leading European motor scooter manufacturer. It has also acquired Giraudy, France's third largest outdoor advertiser, and Skyrock, a radio station operator, from Lagadere; and Coral, the UK's third largest off-course bookmaker, from Ladbroke Group plc.
By Alan S. Brown