Trinseo SA is adding acrylics to its lineup of products that already includes ABS, polystyrene, latex and synthetic rubber. But the company is also looking for a buyer for its synthetic rubber business.
Berwyn, Pa.-based Trinseo announced on Dec. 14 a 1.14 billion euro ($1.36 billion) deal to buy Colombes, France-based Arkema SA's polymethyl methacrylate (PMMA) business.
The deal includes the Plexiglas brand in the Americas, a product that has been in the news as demand surged in 2020 from fabricators making clear shielding to prevent the spread of COVID-19.
Arkema has been actively buying and selling assets as part of a strategy to become a specialty materials supplier. Trinseo said the acrylics business complements its existing offerings across several end markets including automotive, construction, medical and consumer electronics.
"The PMMA market is a very attractive market, where the top five suppliers represent over 50 percent of the total market," Trinseo President and CEO Frank Bozich said Dec. 14. "The applications for PMMA represent end markets with significant overlap with many of our current applications, most notably building and construction, automotive, lighting, consumer electronics and medical."
The PMMA business employs 860 and operates seven production sites — four in Europe and three in North America. Bozich said it "has had very little presence in Asia — the largest and highest growth region for PMMA. This represents a major growth opportunity for Trinseo because we already serve the same markets in China and across Asia with our engineered materials and base plastics."
Bozich estimated it would cost between $40 million and $50 million to build a new plant in Asia.
"It's not a commodity resin business where supply/demand factors figure into the margins. It's really engaging those customers and developing specific solutions for them. So, for that reason, the supply/demand dynamics are much less important than your ability to have a solutions group on the ground, engaging with the customers, which we do," Bozich said.
The business expects to post 2020 sales of around 510 million euros ($620 million) and earnings before interest, taxes, depreciation of amortization of around 122 million euros ($148 million). Arkema called that "a solid performance in the context of COVID-19," noting that 2019 EBITDA was close to its historic high, at 160 million euros ($194 million).
While acrylic sheet demand has been strong in 2020, Arkema has reported that hasn't been enough to offset drops from the automotive market, which shut down early in the year.
Trinseo employs 2,700, generated sales of $3.8 billion in 2019 and operates 17 production sites worldwide. Its performance plastics business makes ABS, polycarbonate and styrene acrylonitrile resins. Trinseo, then known as Styron, was spun off from Dow Chemical Co. in 2010.
Trinseo also announced that it is exploring the potential divestiture of its synthetic rubber business.
"There are several other industry participants who've expressed an interest in our business, and we are confident that we will reach an agreement to sell the business in the first half of 2021," Bozich said.
Thierry Le Hénaff, chairman and CEO of Arkema, said the PMMA divestiture is in line with the strategy that he presented to analysts in April.
"It will allow Arkema to continue to significantly reduce the share of its Intermediates segment and to consolidate its foothold in specialty materials with high technological content," he said.