Styron finds footing as a stand-alone company

By Mike McNulty ERJ staff (R&PN)

Midland, Michigan -- Styron llc bolted out of the gate with a clear idea of what it is and where it's heading after the division was purchased by Bain Capital Partners.

A private equity group based in Boston, Bain bought the Styron Division of Dow Chemical Co., for about $1.63 billion, and turned the global materials producer into a stand-alone company under the Bain umbrella.

Dow Chemical retained a 7.5-percent equity position in the business when the deal closed 17 June. Also included in the sale are several long-term supply, service and purchase agreements between Dow Chemical and Styron that, according to Dow, will generate substantial value for both companies.

Styron's global headquarters site will be in the US and several locations are being evaluated, with one expected to be confirmed by the third quarter, according to Marco Levi, the firm's vice president and general manager for emulsion polymers.

“Styron is a longstanding trademark that was owned by Dow, which has been used for the polystyrene product portfolio,” Levi said.

With the selection of Styron as the company name, he said, “we are broadening the use of the word to reflect the entire new company that includes these styrene-related businesses but also copolymers, polycarbonate, compounds and blends, and latex and rubber businesses.”

Key operations

Two major business groups, Emulsion Polymers and Plastics, and two flagship products, styrene-butadiene latex and polystyrene, are the key drivers within Styron.

Included in the emulsion polymers portfolio are SB latex and styrene-acrylate latex as well as solution styrene-butadiene, lithium polybutadiene, emulsion styrene-butadiene and nickel polybutadiene. The unit supports customers in the paper and board, carpet and artificial turf, tyres and rubber goods industries globally, Levi said.

The plastic group features polystyrene, copolymers acrylonitrile butadiene styrene and styrene acrylonitrile, polycarbonate, expandable polystyrene, compounds and blends, and automotive plastics.

It serves the home appliances, automotive, building and construction, commercial transportation, consumer electronics/information technology equipment, consumer goods, electrical and lighting, medical, and packaging industries, Levi said.

While the firm is venturing out on its own, it can lean on seven decades of heritage “built upon a history of strengths in technology, application expertise, operations excellence, innovation and global reach,” said Christopher Pappas, president and ceo of Styron.

Pappas was named to the top posts at the company in late March, not long after Bain Capital and Dow announced that they had reached the sale agreement. He had been the ceo of Nova Chemicals and has more than 30 years experience in the chemicals and polymers industries.

The 54-year-old executive started his career at Dow in 1978 and he remained there until 1995. He joined DuPont Dow Elastomers in 1996 and moved on to Nova in 2000.

On 6 July, Pappas unveiled Styron's executive leadership team, which includes Levi as emulsion polymers' vice president and general manager; Jeff Denton, vice president, feedstocks and corporate services; Celso Goncalves, vice president and chief financial officer; Paul Moyer, vice president and general manager of plastics; Catherine Maxey, vice president, public affairs, government affairs and business intelligence; Mark Remmert, executive consultant to the ceo; Francoise Schouten, vice president, director of human services; and Curtis Shaw, executive vice president and general counsel.

All of the executives previously held top management positions with Dow, except Shaw, who most recently served as executive vice president, general counsel and corporate secretary at Celanese Corp.

Strong growth prospects

Pappas said that while Styron is proud of its past, the company is more excited about where it's heading.

Styron customers will be working with the same contact people they've dealt with in the past, Levi said, although he did mention one change. “Whereas in the past these experts had to focus on a diverse range of products and industries, they will now be fully dedicated to plastics, latex and rubber.”

The company's future likely will feature growth through geographic expansion and select acquisitions, according to Steve Zide, a managing director at Boston-headquartered Bain Capital.

“Styron has many significant assets, including a solid and innovative product portfolio and a long-term, value-added partnership with Dow,” he said.

Dow announced plans to form the Styron Division in July 2009 when it also said it intended to explore options to divest the operation.

Now that it has sold the Styron Division, Dow will put greater focus on its other specialty chemical, advanced material, agroscience and plastics businesses.

The Styron divestiture is one more step in the company's more disciplined approach to portfolio management and business prioritization, said Andrew Liveris, Dow Chemical chairman and ceo.

“With the close of this transaction, we have exceeded our goal of divesting $5 billion of non-strategic assets, and we have done so in just five quarters,” he said. “These divestitures have enabled Dow to both reduce debt and liberate capital and resources for Dow's higher growth, higher margin businesses.”

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Rubber and Plastics News (a Crain publication)