Royal Dutch/Shell to sell Kraton elastomers to investors

The Royal Dutch/Shell Group of Companies have reached an agreement in principle for the sale of their global Kraton Polymers business to Ripplewood Holdings L.L.C., a private equity investment firm based in New York. This is the last sale in an extensive divestment program announced by Shell in December 1998. It is in line with the strategic drive of Shell's chemicals companies to focus on those businesses closer to base and intermediate chemical building blocks.

The sale of the non-US business and completion of the global deal can only take place after completing formal consultation with staff representatives where needed and the necessary approvals from appropriate regulatory authorities have been obtained.

The Shell Group's Kraton Polymers business manufactures and markets thermoplastic elastomers which are used in applications such as adhesives and sealants, asphalt/bitumen modification, footwear, and moulded and extruded products.

The Group has manufacturing plants in the United States, The Netherlands, Germany, France, Brazil and Japan (via a joint venture with JSR Corp.). In addition, there are global sales and marketing networks and research and development facilities. The business has annual revenues of approximately USD 600 million. General terms and conditions of the transaction as well as the purchase price were not disclosed.

"I am delighted we have reached this important stage in the divestment of our KRATON Polymers business," said Neil Gaskell, who has led the Shell Chemicals Portfolio Task Force. "This is one of our major divestments and, when completed, will mark the end of an ambitious restructuring and divestment program we began less than two years ago. The program will produce a USD 5.7 billion reduction in Chemicals' capital employed compared with the original $5 billion target."

"We have accomplished an incredible amount of work in a relatively short time, and I congratulate all who have been involved in this programme on a job well done," added Gaskell. "Not only have we created viable stand alone global organisations for the businesses we have sold, but also we have at the same time completed a disciplined and competitive divestment programme within the timeframe we originally planned,"

"The Kraton Polymers business is a superb organization, and we are excited to join with the Company as it moves forward with its next phase of growth," said John A. Georges, a Ripplewood Holdings Industrial Partner. "Kraton and its employees across the world have built their Company into the world's leading producer of thermoplastic elastomers, and we look forward to continuing their strong tradition of excellence."

Ripplewood, a manager of private investment funds established in 1995, makes direct investments in select industries that provide opportunities for significant growth, consolidation, and rates of return. With its Industrial Partners, Ripplewood typically buys platform companies as core holdings, then pursues predefined strategies to support the operating management and enhance the value of the businesses. Ripplewood manages approximately $2.7 billion of capital and currently has six partnerships in automotive retail, food manufacturing, technology, industrial manufacturing, chemicals, and supplemental education.

Edited by Drew Bowden
Assistant Editor, Chemical Online