On June 17, Chris Pappas must have felt like he'd gone back to the future.
That's the day Boston-based financial firm Bain Capital LLC completed its $1.6 billion acquisition of Styron LLC, the styrenic plastics and synthetic rubber and latex business of Dow Chemical Co.
Pappas, with more than 30 years of experience in the styrenics field, took over as president and CEO of Styron that same day.
It's rare that you get to do a startup with the heritage of Dow and the financial foundation of Bain, Pappas said in a June 18 phone interview. Our timing is outstanding and our technology is great. I'm absolutely thrilled with this startup.
With products including polystyrene, ABS and styrene acrylonitrile polymers; styrene butadiene latex and synthetic elasto- mers; expanded PS and polycarbonate, Styron posted sales of $3.7 billion last year. The firm employs 1,900 at 20 plants globally.
In PS, Styron is believed to have the world's most capacity, with a 13 percent market share. It operates three styrenic plastics plants in Europe, three in Asia, one in Brazil and a U.S. plant in Midland, Mich. Styron also includes Dow's 50 percent share in Americas Styrenics LLC, North America's largest PS maker.
Dow, which is retaining a 7.5 percent stake in Styron, is based in Midland, and Styron may place its headquarters there as well. A decision on a headquarters site will be made by the end of the third quarter, Pappas said.
Styron generates almost 60 percent of its sales from plastics including PS, ABS and polycarbonate with the remainder coming from emulsion polymers such as latex and synthetic rubber. Europe is Styron's largest sales region, where it has a 42 percent share, followed by North America at 37 percent.
Key end uses for Styron products include appliances, consumer electronics, information-technology equipment and packaging. The deal includes long-term supply agreements with Dow.
For Pappas, his surroundings at Styron have to be somewhat familiar. He worked at Dow from 1978-95, then worked in styrenics and other markets for Nova Chemicals Corp. Pappas was Nova's president and chief operating officer before leaving that firm last year.
Pappas, age 54, said he's glad to be back in the business and he likes what he sees in Styron.
We have ideas that play to value, he said. The industry is in a strong state of rebound from 2008 and early 2009 and is in a very strong position today.
As an example, Pappas cited improvements Styron has made in PS materials for refrigerator liners. The new grades allow manufacturers to downgauge and achieve a huge value, he said.
And even in the economic downturn, Pappas said, Styron never stopped investing in innovation. He pointed out that 275 of the firm's employees more than 10 percent focus solely on technology and innovation. Globally, the firm operates six labs for testing, research and development; two color labs; and three pilot polymerization plants.
As an investor, Bain with $65 billion in assets under management in a variety of industries isn't going to sit still with Styron.
We have a strong asset base and are going to look at growth objectives, Pappas said. Bain bought [Styron] to invest in it. We're looking at investments and in organic growth as well.
Dow announced its plans to sell Styron in July 2009 and reached an agreement with Bain in March. Bain's other plastics-related holdings include stakes in plastic window and door maker Gienow Group and in Sensata Technologies in the Netherlands and FCI of France, both of which operate some injection molding capacity.
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