Crompton Corp. on Thursday announced an agreement to sell its Refined Products business – a leading producer of white oils and petrolatums – to Sun Capital Partners Group Inc., a private investment firm based in Boca Raton, Fla. Although the transaction includes a Dutch plant that makes sodium sulfonates, Crompton said it signed a long-term agreement to keep control of that business.
The deal calls for Sun Capital to pay $80 million for Refined Products, a unit that recorded revenues of $265 million in 2004 and employs 470 people. Sun Capital will acquire four plants – one in Petrolia, Pa., the others in Amsterdam, Koog aan de Zaan and Haarlem, the Netherlands.
Together, Crompton claims, those facilities make Refined Products the worlds largest dedicated supplier of white oils, petrolatums, microcrystalline waxes and other refined hydrocarbons. Those products are used to make air-conditioning and refrigeration lubricants and in applications such as personal care, cosmetics, pharmaceutical ointments, food processing and agricultural sprays.
Crompton, a specialty chemical company based in Middlebury, Conn., said it is selling the unit to focus on other activities.
This sale is part of our plan to divest non-core assets and businesses and focus our resources on the businesses that will produce the greatest results for us and provide the best fit with our business strategy, Chairman and Chief Executive Officer Robert L. Wood said.
Sun Capital, which engages mostly in leveraged buyouts of middle market companies, said it likes the leading position of its prospective acquisition.
Refined Products is a global leader in its market niche, with a reputation for manufacturing high-quality products to its broad and diversified customer base, Vice President Michael Fieldstone said. Other companies in Sun Capitals portfolio range from Sam Goody record stores to Brueggers bagel restaurants, and various manufacturers of specialty papers, aluminum siding, plumbing fixtures and electronic circuit boards, an Angus beef processors and a cookie and confectionary company. Sun Capital has a reputation of targeting bankrupt and underperforming properties for acquisition and turnaround.
The Refined Products sale is subject to regulatory and other approvals and the negotiation of certain ongoing supply arrangements. Crompton and Sun Capital expect it to close within 60 days.
Crompton was quick to point out that it retains control of the natural sodium sulfonate business, issuing a separate statement to emphasize that point. The company said it has entered a long-term supply agreement under which its own employees will continue managing sulfonate production at the Amsterdam plant, the only facility within Refined Products to make the material. Crompton will also coordinate customer service and technical support worldwide.
Officials said Crompton entered the agreement to ensure stable supply to the industry. Natural sodium sulfonates have long been a choice ingredient for emulsification and corrosion protection in metalworking fluids, but the market underwent an upheaval after Shell Oils 2003 closure of its Martinez, Calif., base oil plant, formerly the worlds largest source of natural sulfonates. Since then, a variety of companies have offered synthetic sulfonates and other products as alternative solutions.
This contract shows our continued commitment to meeting global customer demand, now and for years to come, and demonstrates our firm belief in the growth potential of this market, Wood said.
Crompton markets its sulfonates under the Petronates line for grease and industrial and transport lubricant applications. Brand names include LoBase, HyBase and Calcinate.