Following months of speculation on the future of Lucite International Ltd., the world's top producer of acrylic-based products is up for sale and could fetch as much as $2.5 billion.
Charterhouse Capital Partners, the British investment firm that acquired Southampton, England-based Lucite for $960 million in 1999, has decided to sell the producer of methyl methacrylate monomer after receiving several unsolicited approaches.
Lucite confirmed that London-based Charterhouse appointed Deutsche Bank last year to look at various options for Lucite.
The acrylics company, with an annual pretax profit of $253 million on annual sales of around $1.4 billion, is expected to attract eager private equity investors as well as bidders from among the world's big chemicals groups.
News reports speculated last week that several major plastics suppliers would be interested in buying Lucite, as well as private equity firm Blackstone Group.
Deutsche Bank wrote to prospective bidders at the end of January, and detailed information on the business is to be issued this month. A deal is likely to be sealed in the second quarter, a Lucite spokesman said.
Charterhouse bought Lucite, formerly known as Ineos Acrylics, from Imperial Chemical Industries plc. Lucite has 16 plants in nine countries, six of them in the United States and Mexico. The firm claims a 25 percent share of the global market for MMA.
The firm also produces around 2 billion pounds per year of acrylic products such as polymers, composites and sheet. Its acrylic brands include Perspex and Lucite, and its products are used in bathrooms, lighting, construction, coatings, signage and television and telecommunications equipment screens.
Lucite has invested heavily in developing a low-cost process for manufacturing MMA, which it calls its Alpha technology. Lucite claims the process can make the material, the key building block of acrylic resin, 40 percent more cheaply than alternative methods.
The company plans to launch its first 265 million-pound-per-year plant using Alpha technology by the end of 2007 in Singapore. Lucite also commissioned a 220 million-pound-per-year MMA plant, not using Alpha, last year in Caojing, near Shanghai, China, to address rapidly expanding Chinese acrylics demand.
One potential buyer for Lucite is Tokyo-based Mitsubishi Rayon Co., Asia's leading MMA products manufacturer. The two companies already have a relationship, and Mitsubishi Rayon plans to launch an MMA plant in Huizhou, China, by June, and one in Texas by the end of 2009.
Last year, Charterhouse seriously considered an initial public offering for Lucite, but dropped the plan because erratic movements in raw material prices made it hard to predict the firm's financial performance.
Lucite could prove an attractive acquisition to a chemical company because of its leading position in MMA, according to ratings agency Standard & Poor's.
``Lucite has about 38 percent of the merchant market (products sold externally),'' and has a diverse base of downstream applications and customers, S&P said in a news release.
Some potential suitors were tight-lipped. BASF AG in Ludwigshafen, Germany, and Dow Chemical Co. in Midland, Mich., declined to comment.