Officials with the financial firm that owns Kraton Polymers LLC have said the unit is up for sale - but industry consultant Balaji Singh isn't convinced.
Ian Snow, managing director of Ripplewood Holdings LLC of New York, confirmed in early August that Ripplewood was looking to sell the business, which Ripplewood acquired from Royal Dutch/Shell Group for $520 million in 2001.
Houston-based Kraton ranks as the world's largest maker of styrenic block copolymers, with 700 million pounds of annual capacity and annual sales of about $650 million.
But Singh, president of Chemical Market Resources Inc. in Houston, said Ripplewood's rumored asking price of $840 million for the Kraton unit is roughly eight times Kraton's earnings, and is too high a price in the current economic climate.
``No one is going to buy [Kraton] at that price,'' Singh said at Flexpo 2003, held Sept. 17-19 in Galveston. ``Ripplewood may just be letting people kick the tires to see what it's worth. Less than three years isn't long enough to decide to sell or not.''
Singh ranks Kraton as the largest SBC maker in North America, Europe and Japan, with a market share of at least 40 percent in each of those regions. The only region where Kraton has had little success is outside Japan in Asia, where it holds only 2 percent of the market.
Kraton has enjoyed a dominant run in the SBC world since the 1960s, but is facing increasing challenges from other SBC makers, Singh said.
According to Singh, potential Kraton buyers include other SBC makers like Enichem SpA of Milan, Italy, and Dynasol SA of Madrid, Spain; elastomer makers like DuPont Dow Elastomers LLC of Wilmington, Del., and Bayer AG of Leverkusen, Germany; or various venture capitalist firms. A management buyout also is not out of the question, said Singh.
``Kraton [materials are] still the crown jewels of the SBC market,'' Singh said. ``It doesn't matter which crown they will adorn.''