Mexichem SAB de CV is paying $300 million to buy compounder AlphaGary Corp. from Rockwood Holdings Inc.
Princeton, N.J.-based Rockwood announced the deal Dec. 17.
The deal will be completed some time in the next few months, said Timothy McKenna, Rockwood vice president of investor relations.
AlphaGary has annual sales of $231 million, according to Mexichem, which is Latin America's largest manufacturer of PVC pipe, vinyl resins and compounds.
With this acquisition, we can combine AlphaGary's research and development potential and innovative products with Mexichem's geographic diversification, thus generating important synergies, Mexichem said in a statement posted on the Mexico City Stock Exchange website.
Leominster, Mass.-based AlphaGary develops high-technology compounds for niche applications and has multinational clients in such sectors as communications cables, disposable medical devices, crown and closure sealants, auto parts, building materials and consumer products.
Its range of compounds includes flexible PVC and halogen-free alloys, styrene-, vinyl- and olefin-based thermoplastic elastomers, nylon alloys, polyurethane blends and cross-linkable polyethylene.
AlphaGary has four production facilities in the U.S., United Kingdom and Canada. Two sites are designed with segregated areas for manufacturing compounds for medical-device and beverage-sealant products.
We identified [AlphaGary] as a noncore business several years ago, McKenna said, practically since the time we went public.
He declined to say when Rockwood opened negotiations with Mexichem and whether the New Jersey company had spoken to other potential buyers. I can't characterize the negotiations with Mexichem, he said. I think it's a good deal for both parties.
McKenna said Rockwood will use proceeds from the sale to reduce debt.
Based in Mexico City, Mexichem produces a variety of chemical products at 40-plus plants in Latin America, the U.S., the United Kingdom, Japan and Taiwan.
In October it announced net sales of $26.9 billion pesos ($2.17 billion) for the first three quarters, up 19.4 percent compared with the same period in 2009.
Since launching a $1 billion program of acquisitions three years ago, it has spent an estimated $500 million. The deal with Rockwood, if approved by antitrust authorities, will push that to an estimated $800 million-plus.
In late November, Mexichem restated its ambitions for the Americas and Europe, saying on the Mexico City Stock Exchange website that we are continuing with our expansion plans.
At the time, the company said it was studying the feasibility of business opportunities in Latin America, the U.S. and Europe that satisfied Mexichem's growth, efficiency and profit criteria.
In a statement, Rockwood Chairman and CEO Seifi Ghasemi said, The completion of the sale of this compounding business is another step in concentrating our portfolio on high-margin, specialty chemicals and advanced-materials businesses.
The company also focuses on global niche segments in pigments and additives. Rockwood employs 9,500 worldwide and has annual net sales of about $3 billion. AlphaGary is the largest division in Rockwood's specialty compounds segment.