WEST CHICAGO, ILL. (Updated March 2, 1:30 p.m. ET) — Estimates of the price Huntsman Gay Global Capital paid for Citadel Plastic Holdings Inc. range from $150 million to $350 million, according to financial pros contacted by Plastics News.
Huntsman Gay Global Capital is a private equity firm co-founded by Plastics Hall of Famer Jon Huntsman. The companies did not disclose the purchase price.
Bill Ridenour, owner of Polymer Transaction Advisors Inc. of Newbury, Ohio, said he was not impressed by the deal. He said strategic buyers that may have paid a higher price for Citadel may not have been interested in Citadel's uncommon mix of thermoplastics and thermoset plastics assets.
“I don't think Wind Point got the value out of Citadel that they were hoping for,” Ridenour said. “The bigger companies in compounding don't have any thermoset business because it's not a high growth market.”
Thomas Blaige, chairman and CEO of Blaige & Co., a Chicago financial firm, countered that he thought Huntsman Gay's purchase of Citadel “is a good deal, because Citadel has been very successful in combining companies and has a good management team.”
Blaige added that private equity companies such as Wind Point “have a history of getting companies ready for their second phase of growth.” As an example, he cited Wind Point's role in the growth of packaging firm Tegrant Corp. Subsequent owner Metalmark Capital LLC sold Tegrant to Sonoco Products Co. for $550 million last year.
An executive close to the Huntsman Gay-Citadel deal said that Citadel's thermoplastic/thermoset mix “had no role at all” in its ability to find a buyer. “At each step of the process, interest in Citadel was higher than what was expected,” he said. “Everybody was pleased with the result.”
The executive added that he expects that Citadel “will seek out future acquisition candidates” under Huntsman Gay's ownership.
West Chicago-based Citadel was founded in 2007 by private equity firm Wind Point Partners of Chicago and since then has purchased six plastics materials firms. Its two largest holdings are compounder Matrixx Group of Evansville, Ind., and thermoset materials maker Bulk Molding Compounds Inc. of West Chicago, Ill.
Citadel has annual sales of about $300 million, operating 14 plants in seven countries.
Huntsman Gay is based in Palo Alto, Calif., and has $1.1 billion in total investments, including 10 portfolio companies. Jon Huntsman co-founded the firm along with four partners, including Robert Gay, former managing director of Boston private equity giant Bain Capital LLC, and NFL Hall of Famer Steve Young, a former quarterback for the San Francisco 49ers.
Citadel is Huntsman Gay's first investment in the plastics and chemicals sector.
Jon Huntsman serves as chairman of Huntsman Corp., the global plastics and chemicals maker that he founded in 1970. Products produced by the firm include polyurethane and other thermoset materials.
Although Huntsman and Bulk Molding Compounds Inc. both are active in thermosets, sources said the two firms have no supply relationship or other business connections.
Wind Point began assembling Citadel when it bought Matrixx in 2007. It then bought BMCI and a smaller compounder — Aclo Compounders Inc. of Cambridge, Ontario — in 2008. In 2009, Citadel bought a compounding and injection molding plant in Brazil from Meridian Automotive Systems Inc.
Later that year, Wind Point bought compounder Fiberfil Engineered Plastics Inc. of Stoney Creek, Ontario. Fiberfil had been in receivership, leading Citadel to close its plant and transfer most of its work to Matrixx in Evansville.
Citadel made its sixth and final deal in 2010, acquiring recycled-resin compounder QTR Inc. of Evansville.
