UPDATED: Royal DSM NV will spin off its business units that make composite resins — as well as plastic feedstocks caprolactam and acrylonitrile — into a separate company.
The spinoff will include a caprolactam plant in Augusta, Ga. A DSM spokeswoman said the firm's plans to build a new nylon resin plant in Augusta won't be affected by the CVC transaction. That nylon plant — set to open in mid-2016 — will remain with DSM, the spokeswoman added.
DSM — based in Heerlen, the Netherlands — will own 35 percent of the new firm, with financial investor CVC Capital Partners of London owning the remaining 65 percent. The new company will have annual sales of more than $2 billion and will employ almost 2,000 worldwide.
At closing, DSM will receive net cash proceeds of at least 300 million euros ($318 million). The deal also will result in DSM booking a first-quarter loss of 130 million euros ($138 million).
In a March 16 news release, DSM officials said that the deal “is a logical step in the execution of its strategy,” since the businesses being spun off “no longer fit” with the firm's nutrition and performance materials units. Partnering with CVC “allows DSM to further reduce the cyclicality of its portfolio,” they said.
“DSM can now focus fully on improving the operating performance of its nutrition and performance materials businesses,” CEO and Chairman Feike Sibejsma said in the release.
DSM's engineering plastics unit will receive at least 80 percent of its North American and European caprolactam needs from the new firm for 15 years. This arrangement “secures an ongoing strategic and competitive position” for the unit's nylon 6 business, officials added.
The composite resins business placed in the new company include thermoset sheet molding compound and bulk molding compound materials. Acrylonitrile made by the new firm is used as a feedstock in ABS and other specialty resins as well as in synthetic rubber.
Activist investor Third Point LLC of New York — which owns a 3 percent stake in DSM — has pushed DSM to make changes to its business model. Third Point made similar demands on Dow Chemical Co. last year, leading to Third Point candidates being added to Dow's board of directors.
DSM is a global plastics and chemicals maker with annual sales of more than $10 billion.