It looks like Ashland Distribution will stay in the resin market after all.
The Dublin, Ohio-based resin distribution leader agreed April 27 to buy the distribution business of Albis Plastics of Rosenberg, Texas. No purchase price was disclosed in the deal, which includes distribution of small-lot color compounds that Albis produces in Rosenberg.
No physical assets were included. An undetermined number of Albis employees will transfer to Ashland, according to Ashland spokesman Jim Vitak.
In recent years, rumors had swirled that Ashland Inc., the Covington, Ky.-based conglomerate that owns Ashland Distribution, was looking to exit the distribution business. But financial performance at the unit - which includes plastics, chemicals, composites and environmental services - has improved significantly.
Last year, Ashland Distribution posted record operating profit of $78 million and was Ashland's largest overall business, with sales of $3.2 billion - almost 40 percent of the parent's total. Ashland Distribution's sales were up 14 percent in 2004 and its operating profit more than doubled. Plastic resins account for about $1 billion of Ashland's Distribution's annual sales total.
The Albis deal ``allows Ashland to gain access to a good number of customers'' and grants Ashland distribution rights for Eastman Chemical Co.'s glycol-modified PET resins, Vitak said. The addition of PET-G ``fills a gap'' in Ashland's plastics lineup, he added.
Albis reported sales of $90 million in 2002 - the most recent year available - with $30 million of that amount coming from proprietary and toll compounding of engineering resins. The firm - a unit of Albis Plastics GmbH of Hamburg, Germany - distributes resins and compounds for Bayer Corp., BASF Corp., Eastman, Alphagary Corp., Lanxess Corp., Plaskolite Inc. and Samsung Cheil Industries Inc. Vitak said there was ``some overlap'' in the distribution mix of the two companies.
Plastics industry analyst Margaret Baumann said Ashland could benefit from the purchase by consolidating more business with Bayer, whose resins are distributed by both firms. But Baumann, president of G.H. Associates in Lebanon, N.J., added that Albis' compounding business probably played an important role in the deal as well.
``A lot of the resins that Albis distributes need to be colored, and that adds value,'' said Baumann.
Albis operates 13 twin-screw compounding lines in Rosenberg, where it employs 170.