PolyOne Corp.'s lengthy battle with one of its own joint ventures - color concentrate maker Techmer PM LLC - has ended with Cleveland-based PolyOne agreeing to sell its 51 percent stake in Techmer to partner TPM Holdings of Los Angeles.
PolyOne had been locked in arbitration with Techmer since early 2000, when Techmer President and founder John Manuck - along with the three other American and Asian investors that make up TPM - tried to dissolve the partnership. Manuck and his partners claimed that PolyOne predecessor M.A. Hanna Co. had violated terms of a joint venture agreement begun in 1997.
Specifically, Techmer officials claimed that Hanna unit Southwest Chemical was refusing to work with Techmer and was trying to take some of Techmer's business, even after the joint venture was formed. Hanna merged with Geon Co. to form PolyOne in mid-2000.
``We're extremely excited about the future of our company,'' Manuck said after the deal was announced Dec. 20. ``This will clear up a lot of uncertainty for our suppliers, customers and employees.''
Terms of the sale were not disclosed. Manuck added that the sale was discussed well before PolyOne's Dec. 18 announcement that poor financial performance would lead the firm to consider selling some assets to reduce debt.
PolyOne spokesman Dennis Cocco said the Dec. 18 announcement and the Techmer deal ``happened independently of each other,'' but he added that selling its stake in Techmer will help PolyOne improve its financial picture.
Since the two sides went to arbitration, Manuck said, competitors had tried to use the dispute against Techmer to gain business.
``We've had competitors tell our customers that we weren't an alternative to PolyOne,'' he said. ``They'd say we were going to be owned by PolyOne and we'd have to come back and tell our customers that, no, we're going to be independent.''
According to Manuck, Techmer continued to compete with PolyOne in the concentrate market as well, while the case slowly made its way through the American Arbitration Association.
However, PolyOne's Cocco said he was unaware of any case in which PolyOne and Techmer were competing for the same business.
Techmer stayed active during the dispute, buying a plant in Dalton, Ga., and opening a sales office in Germany in 2002. But Manuck said resolution of the conflict with PolyOne will open the door for further expansion, including the potential purchase of plants owned by Ciba Specialty Chemicals AG in Saudi Arabia and Malaysia.
Techmer employs 500 at plants in Clinton, Tenn.; Rancho Dominguez, Calif.; Dalton and Gainesville, Ga.; and Wichita, Kan. The firm's 2002 sales were flat at about $130 million, Manuck said. The fibers market accounts for about 30 percent of Techmer's business.
Manuck described the now-finished Techmer/PolyOne ordeal as ``a learning process.''
``It's made me more cautious of entering into partnerships, but it's also given me confidence in the strength of our business and technology and our understanding of the marketplace,'' said Manuck, who founded Techmer as a six-employee firm in Los Angeles in 1981.
PolyOne's Cocco added that Techmer had been run separately and was not included in a PolyOne asset evaluation that has led to the closing of one-third of the firm's plants in the past 18 months.
During the partnership, there was no cross-production of PolyOne or Techmer concentrates at each other's locations, Cocco said, and no equipment from vacated PolyOne sites was transferred to Techmer sites.
On Dec. 18, PolyOne estimated its fourth-quarter loss at between $16 million and $20 million. The firm already had lost more than $40 million in the first three quarters, after losing $46 million in 2001.
The Dec. 18 news sent PolyOne's per-share stock price down 50 percent to $3.20. It had rebounded to $4.15 in late trading Jan. 2.