DSM to spin off composites/polymer intermediates business; CVC to partner in new company

Dutch chemicals company DSM is spinning off its composite resins and polymer intermediates (caprolactam and acrylonitrile) businesses with UK-based financial investment company CVC Capital Partners (CVC) to own 35% of the new company known as NewCo and DSM, 65%. The enterprise value of the transaction is EUR600 million plus an earn-out of up to EUR175 million.

NewCo will have 1,950 employees, annual sales of EUR2.1 billion with a 2014 EBITDA of EUR106 million. At closing, DSM will receive net cash proceeds of at least EUR300 million and it will post a first-quarter loss of EUR130 million.

Feike Sijbesma, CEO/Chairman of the Managing Board of DSM said that the proposed transaction delivers on the strategic actions DSM announced for these businesses in November 2014 and is a decisive step in further optimising its portfolio and reducing its cyclicality. “We have found a good partner in CVC after a careful process in which we evaluated all options. We believe the partnership with CVC is the best way forward for these businesses. NewCo will operate as an independent, dedicated company under the leadership of CVC. DSM can now focus fully on improving the operational performance of its Nutrition and Performance Materials businesses as well as benefitting from the future value creation in this new venture.”

DSM will contribute its global caprolactam business (Europe, North America, its 60% stake in DNCC (China) and the caprolactam licensing business), its acrylonitrile business and Composite Resins business including its 75% stake in JDR (China). Also included is DSM’s 65% stake in the service organisation Sitech Services held via its caprolactam and acrylonitrile businesses will also be transferred.

DSM Engineering Plastics has secured at least 80% of its caprolactam needs for 15 years after closing via drawing rights to secure its strategic position and competitiveness, effectively maintaining DSM Engineering Plastics’ backward integration

DSM says that this proposed transaction is a logical step in the execution of its strategy as Polymer Intermediates (caprolactam, acrylonitrile) and Composite Resins no longer fit with its more resilient portfolio in Nutrition and Performance Materials.

NewCo will continue to supply at least 80% of DSM Engineering Plastics’ caprolactam needs in Europe and North America for the coming 15 years via a drawing rights contract, effectively maintaining DSM Engineering Plastics’ backward integration. In China DSM Engineering Plastics will continue to be supplied by NewCo as today. This secures an ongoing strategic and competitive position for the polyamide 6 business in which DSM is a global leader.

Due to the ownership change of DSM’s caprolactam and acrylonitrile businesses, NewCo automatically becomes an indirect 65% shareholder in Sitech Services, the on-site service provider at the Chemelot Industrial Park in Sittard-Geleen (Netherlands). As a service provider, Sitech generally reinvests the majority of its profit into the Chemelot Industrial Park. DSM will remain a 5% shareholder in Sitech Services via DSM Engineering Plastics. In 2014 Sitech Services generated an EBITDA of EUR27 million, reported within DSM’s Corporate Activities.

Over the past ten years, DSM has further developed the Chemelot Industrial Park and the Brightlands Chemelot Campus (Research) in Sittard-Geleen (Netherlands) into a world-leading innovation and production location. The close cooperation with the University of Maastricht and the Province of Limburg further enhances this development. Both the Industrial Park and the Campus have a deep-rooted cluster of activities, with over 100 companies and knowledge institutions such as Eindhoven University present, currently employing over 7,000 people, a number which is increasing. DSM is fully committed to its contribution for the further development of the Chemelot Industrial Park and Brightlands Chemelot Campus.


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