Investment firm One Rock Capital Partners LLC is buying the resin distribution business of Nexeo Solutions Inc. in a deal worth $640 million.
Chemicals distributor Univar Inc. announced plans in September to acquire Nexeo — a distributor of specialty chemicals and plastic resins — for $1.8 billion. But Univar officials soon said they didn't plan to keep the resin distribution business, which didn't mesh with Univar's existing businesses.
"We are excited about the opportunity to create a standalone plastics distribution business and invest in growth by deepening its relationships with customers and supplier partners," One Rock Managing Partner Tony Lee said in a Feb. 8 news release.
Plastics Executive Vice President Shawn Williams will continue to run the resin distribution business after the sale to One Rock. In the release, Williams said that Nexeo "looks forward to operating as a pure-play plastics business and will focus our talent and resources on expanding our service offering for our suppliers and customers worldwide."
The divestiture is expected to result in net cash proceeds of at least $615 million, which Downers Grove, Ill.-based Univar will use to pay down debt.
The sale has been approved by the boards of directors of both Univar and Nexeo, which is based in The Woodlands, Texas. The deal is expected to close in the first half of 2019, subject to regulatory approvals and the closing of Univar's acquisition of Nexeo.
One Rock — based in New York and Los Angeles — currently owns 10 businesses in a variety of industries. The firm "focuses on control-stake equity investments in middle-market companies in North America," according to its website. Industrial conglomerate Mitsubishi Corp. of Tokyo is a strategic partner in One Rock. Nexeo currently distributes engineering resins for Mitsubishi in Europe.
Goldman Sachs & Co. LLC served as financial adviser for Univar on the sale, with Moelis & Co. LLC working with Nexeo and Jefferies LLC working with One Rock.
Nexeo posted plastics sales of just under $2 billion in the fiscal year ended Sept. 30. That amount was up 8 percent vs. fiscal 2017 and represented more than 49 percent of Nexeo's total sales. Gross profit for plastics at Nexeo in fiscal 2018 was up 11 percent to $186.4 million.
Nexeo distributes resins, compounds and concentrates for more than 20 suppliers. The firm had been publicly traded since June 2016. Nexeo formed in 2011 when investment firm TPG Capital paid almost $1 billion for the distribution business of Ashland Inc.
In mid-2018, Nexeo opened a major new resin distribution site in Montgomery, Ill., outside of Chicago. The $13 million facility covers 158,000 square feet and is the largest in Nexeo's network. The Montgomery site employs 20 and has double the warehousing and bulk processing capacity of Nexeo's previous Chicago-area location.
The new site also has the space to quadruple production levels to support future growth. The Montgomery facility uses 12,000 pallets, two high-speed pack-out lines, one manual pack-out line, four rail spurs with total capacity of 36 railcars, 14 loading docks and six new storage silos.
