Monsanto Co. may sell its ABS and styrene acrylonitrile resins business, the firm announced June 9. Although the St. Louis firm is the third-largest producer of ABS resins in the world, Monsanto officials and competitors said its plastics product line may not be broad enough to remain in the business.
``We are primarily an ABS marketer,'' said Monsanto spokeswoman Christy Beckmann. ``To be a major resin player, you need more than styrenics.''
A Dow Chemical Co. official said, ``Monsanto does well in ABS but they have a limited [polymers] portfolio.''
Monsanto's ABS and SAN products, however, go beyond commodity resins. Its offerings include Triax ABS alloys, Centrex SAN-based weatherable polymers and specialty medical grades.
Its main competitors in North America, GE Plastics of Pittsfield, Mass., and Dow, have broader engineering resin mixes, including polycarbonate. Dow also rounds out its resin line with a diverse palette of commodities.
Beckmann estimated Monsanto's ABS and SAN global nameplate capacity, including a joint venture plant in Map ta Phut, Thailand, due to start production next year, at 1 billion pounds per year. Industry executives said only Chi Mei Corp. of Taipei, Taiwan, and Dow Chemical Co. are larger globally. GE Plastics is the largest ABS producer in North America, followed by Monsanto.
Robert G. Potter, Monsanto executive vice president, said the company will take several months to decide whether to sell its styrenics business. It hired Morgan Grenfell Ltd., a major London investment banking firm, to help evaluate the business.
Some potential suitors reacted cautiously when asked if they were interested in the Monsanto business.
Dow expects to be contacted by Mor-gan Grenfell and ``will do its homework'' and study the Monsanto business, Dan Kaufman, the firm's product manager for ABS and SAN, said in a telephone interview from Dow's Midland, Mich., headquarters.
A Huntsman Chemical Corp. official said such a purchase might interest his firm because it has grown through acquisition.
``We always look at these kinds of things, but there are a lot of factors to consider,'' said Don Olsen, senior vice president of public affairs.
GE officials declined to comment.
Competitors and analysts indicated Chi Mei could be a suitor. Chi Mei is expanding ABS capacity in Asia to meet booming demand in that region. Chi Mei bought land in late 1991 in Bayport, Texas, for a possible ABS plant there, but has not announced any decision to proceed. Several distributors handle Chi Mei resin in North America.
Chi Mei officials in Taiwan declined to comment on the Monsanto business and on the status of the Bayport project.
Paul Raman, chemicals analyst with S.G. Warburg of New York, said Monsanto's reliance on outside sources for raw materials is a disadvantage for its styrenics business. A firm producing such raw materials could be a candidate to buy the business. He said GE or Dow could face U.S. antitrust problems if they want to buy the business.
Monsanto's Addyston, Ohio, styrenics plant, its largest, also makes Centrex, according to Beckmann. Other North American plants are in Muscatine, Iowa, which focuses on ABS and SAN, and in LaSalle, Quebec, which focuses on Triax. Monsanto also has a large plant in Ant-werp, Belgium.
The Thai plant due to begin production next year is a joint venture between Premier Enterprise Co. Ltd. of Thailand and Monsanto Kasei Co. of Japan.
Beckmann stressed that Monsanto's interests in joint venture styrenics plants in Brazil and Argentina would not be part of a potential sale ``because we feel strongly the need to maintain a manufacturing presence in the two largest economies in South America.'' She said Monsanto's Vydyne nylon resins business would not be for sale.
Analysts said they are not surprised Monsanto is thinking of selling its styrenics business. Raman estimated that the business falls short of the 13-15 percent return on capital that Monsanto could get in money market investments.
Raman said it could be a good time to sell the business because ABS markets are strong. However, resin suppliers said demand has softened slightly in North America because the automotive and housing markets are slowing.