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US investment firm adds to its European PVC business

By: Don Loepp

January 1, 2014

Los Angeles-based private buyout firm OpenGate Capital has wrapped up the second acquisition in one month of a PVC-related company in Europe.

OpenGate announced that it has won a bid to buy Kem One SAS, an insolvent PVC resin supplier based in Lyon, France. Terms were not disclosed.

Kem One is Europe's second-largest producer of PVC products, according to OpenGate. The seller is Swiss investment firm Klesch & Co. Ltd., which bought the business from Colombes, France-based Arkema SA in July 2012.

OpenGate is buying the business in a partnership with Alain de Krassny, a European chemicals industry executive and president of Vienna-based Donau Chemie AG. OpenGate and Krassny had been competing to buy Kem One, before deciding to combine forces on the deal.

The OpenGate-Krassny partnership also has an option to buy Kem One's downstream PVC extrusion business, Kem One Innovative Vinyls SAS.

Kem One makes PVC resin at seven plants, including six in France and one in Spain. The company has annual production capacity of more than 900,000 metric tons of PVC and employs more than 1,300, according to OpenGate. The company has annual sales of about $1.1 billion

Andrew Nikou, OpenGate's founder, managing partner and CEO, said his company saw both "operational challenges" and "tremendous potential [for] synergies" by adding Kem One to its holdings, which include two other European PVC business.

In early 2013, OpenGate bought PVC profile extruder Profialis from Tessenderlo Group. More recently, in early December, OpenGate announced a deal to buy a European PVC compounding business called Benvic from Solvay SA. That deal is scheduled to close in the first half of 2014.

Benvic's manufacturing plants are in France, Italy and Spain. The business employs around 200 and has annual sales of $220 million.

Kem One is the 14th business to join the OpenGate Capital portfolio, which now generates annual sales of $3 billion and employs 8,000.

The sale of Kem One SAS brings to an end a dispute between Klesch and Arkema. In a statement, Arkema said:

“In order to facilitate this takeover, Arkema has in particular waived all its claims on Kem One SAS which had been fully provisioned, adjusted certain commercial services provided to Kem One SAS, and undertaken, under certain conditions, to ensure the internal redeployment of 100 Kem One SAS employees.”