Two years after buying Kraton Polymers LLC, Ripplewood Holdings LLC is selling the styrenic block copolymer leader to Texas Pacific Group for $770 million.
The transaction price represents a 48 percent markup from the $520 million that New York-based Ripplewood paid for Houston-based Kraton in 2001.
``Kraton has accomplished a great deal since we acquired the company ... enabling us to earn an attractive return for our investors,'' Ripplewood Managing Director Ian Snow said in a Nov. 10 news release.
TPG, based in Fort Worth, Texas, is a private investment firm with more than $13 billion in assets, including major stakes in J. Crew, Burger King, Del Monte and America West. TPG also was instrumental in the turnaround of Continental Airlines, but no longer is a shareholder.
The Kraton buy is TPG's first move into the specialty chemicals market, a TPG spokesman said. Typically, TPG holds on to its investments for five to seven years before selling them, he added.
``TPG had been looking at the specialty chemicals sector for about a year,'' the spokesman said. ``Kraton definitely has a next stage of growth.''
TPG has no plans to make management changes at Kraton because, the spokesman said, it's ``not a turnaround situation.''
``The support and commitment shown by TPG gives me confidence that together we will find success in the next stage of our evolution,'' Kraton Chief Executive Officer Stephen Wood said in the release.
In a Nov. 10 telephone interview, Wood added that the transition to a new owner might not be difficult for Kraton and its staff because it went through the same process only two years ago.
``TPG is going to be very supportive of our growth strategy,'' Wood said. ``But without a doubt, Ripplewood was a good owner as well. They gave us the freedom we needed to grow.''
Kraton is the world's largest maker of styrenic block copolymers, which are used in footwear, adhesives, sealants, asphalt modification and compounding. The firm operates six plants worldwide, with 700 million pounds of annual capacity and 950 employees.
In 2002, Kraton posted sales of about $650 million. Sales growth for 2003 is expected to be around 2-3 percent overall and as high as 10 percent for its Kraton G line of SBCs.