Two investment companies have agreed to buy PolyOne Corp.'s rubber compounding business for about $120 million.
PolyOne has reached a definitive agreement with Lion Chemical Capital LLC and ACI Capital Co. Inc., ending an eight-month search for a new owner for the world's largest custom mixer. The deal is expected to close in the third quarter.
PolyOne said the partners will pay $106 million in cash and $14 million in the form of a note for the business, which operates three plants in the United States and one in Mexico and is building another near Shanghai, China. PolyOne plans to use the proceeds to pay down debt.
``We got a fair price for it, within the range of estimates we had figured,'' said Dennis Cocco, PolyOne vice president of investor relations and communications.
Multiple bidders were interested in the business, but for several months Lion Chemical and ACI Capital, both based in New York, have been the prime candidates.
``It was really challenging, valuing the whole business,'' Cocco said. ``You look at its 2003 or 2004 performance and you might underestimate its value. It had some very good years in the late 1990s.''
Several securities analysts had valued the unit at about $100 million. The largest of four businesses PolyOne is divesting, rubber compounding had sales of $349 million through the four quarters ended March 31, accounting for 13.5 percent of the corporation's total sales.
PolyOne also is seeking buyers for its engineered films and specialty resins divisions, as it emphasizes its plastics compounding, color and additives masterbatch and distribution businesses. Cocco couldn't discuss the progress of the other divestitures, but said PolyOne still plans to sell them by the end of the year.
