Noveon Inc., a maker of specialty PVC, thermoplastic polyurethane and cross-linked polyethylene, and one of North America's largest compounders, plans to go public with a stock offering.
The firm was spun off from then-BFGoodrich Co. in late 2000 and now is owned by AEA Investors Inc. of New York. AEA paid $1.4 billion for what had been Goodrich's performance materials business.
The stock offering is expected to raise about $345 million, with almost $200 million of that amount going to pay off debt that Brecksville, Ohio-based Noveon owes its former parent.
Noveon could be going public in a difficult economic climate. But the firm could avoid the stock pitfalls of other publicly held chemical companies because all of its products are specialty, high-margin items, according to industry analyst Balaji Singh.
``These are designer applications where there's very little competition,'' said Singh, president of Chemical Market Resources Inc. in Houston. ``I think investors will see that these are higher profit-margin areas that aren't subject to the ups and downs of commodities.''
Noveon's specialty materials segment - which includes chlorinated PVC, TPU and cross-linked PE as well as reactive liquid polymers - is the largest of the firm's three business units, contributing about 38 percent of Noveon's $1.06 billion sales total in 2001. Its other units are performance coatings - which includes emulsion polymers - and consumer specialties, which makes thickeners and other additives.
Through the first half of 2002, Noveon notched sales of $540.3 million, down more than 2 percent from the same period in 2001. The firm turned a first-half profit of $13 million in 2002. In 2001, it lost $34 million for the full year.
Noveon's specialty materials unit had first-half sales of $204 million, down less than 2 percent from 2001. The unit's first-half performance was chalked up to lower demand for its Estane-brand TPUs, although demand was up for its TempRite-brand CPVC in plumbing and fire-sprinkler applications. Noveon's cross-linked PE also is marketed under the TempRite brand name.
Noveon employs 2,800 in 27 plants worldwide. The United States accounts for 65 percent of the firm's sales. Its primary TPU production is in Avon Lake, Ohio, while production of CPVC is centered in Louisville, Ky.
In a recent Plastics News ranking, Noveon placed among the 30 largest compounders in North America, with annual North American sales estimated at $90 million and $180 million.