By: Frank Esposito
July 17, 2013
Composites maker Cytec Industries Inc. is taking several actions related to last year's purchase of Umeco plc.
Woodland Park, N.J.-based Cytec is closing three former Umeco plants in California, shutting down a Chinese joint venture and is selling off a Umeco distribution unit.
The three California plants being closed are in Costa Mesa, Adelanto and Huntington Beach. About 120 jobs will be eliminated as a result of the closings, Cytec officials said in a July 15 news release. Work done at those plants will be moved to Cytec sites in Winona, Minn., and Tulsa, Okla.
Closing the plants and transferring equipment will cost Cytec about $27 million, officials said.
The California sites are expected to be closed by mid-2015. The affected plants made films and similar products based on epoxies, phenolics and other thermosets for aerospace and related industries. The move is expected to save Cytec between $3 million and $4 milllion annually.
Umeco's Process Materials joint venture in China will be liquidated. The JV served the Chinese wind market, which has struggled. The closure will result in a second-quarter pretax charge of $3.3 million for Cytec. Umeco formed the JV in 2010 along with partner Shanghai Leadgo Technology Co. Ltd. Umeco had invested about $4 million in the JV, which operated a plant in Shanghai making vacuum-bagging films.
The Umeco distribution products unit has been sold to private equity firm Cathay Investments for $8.6 million. The business distributes polyester, vinyl ester, acrylic and phenolic resins, as well as premium gel coats and low-profile additive products, for Ashland Inc. and other supply partners worldwide. The unit posted sales of about $20 million in the first five months of 2013, Cytec officials said in the release.
Cytec will take a second-quarter pretax loss of $12.5 million on the sale.
Cytec paid almost $440 million for Umeco, a British firm founded in 1917. The deal — announced in April 2012 — is expected to increase Cytec's annual sales by more than $300 million.
In 2012, Cytec's sales rose 20 percent to more than $1.7 billion, but the firm's profit fell 9 percent to less than $200 million.