Materials maker Trinseo is delaying the sale of its styrenics business because of recent economic conditions.
The announcement sent Trinseo's per-share stock price down more than 20 percent to a little more than $34 in late trading July 26. It's now down almost 40 percent since the start of the year.
Berwyn, Pa.-based Trinseo in November announced plans to sell the styrenics business, which had sales of $1.1 billion in 2021. In a July 26 news release, officials said that the sale process "generated broad and significant interest from both strategic and financial parties … [but] the deterioration of financing markets and the economic uncertainty created by the war in Ukraine … has impeded the company's ability to obtain full value for the business."
President and CEO Frank Bozich added that "while the separation of the styrenics business is part of our transformation strategy, the current economic and financing environments make it challenging to get a value for the assets that is reflective of their significant cash generation."
"Therefore, we have decided to pause the sale process," he said. "In the meantime, we will utilize the cash generation of the styrenics and other businesses to invest in organic growth projects, increase our sustainable product offerings, decrease our CO2 footprint and return cash to shareholders."
The delay of the styrenics sale doesn't change Trinseo's transformation strategy of becoming a higher growth, higher margin and less volatile specialty material and sustainable solutions provider, officials said. They added that the firm will reevaluate a potential sale when macroeconomic conditions improve.
The planned sale would include Trinseo's feedstocks and polystyrene reporting segments, as well as its 50 percent ownership of North American PS maker Americas Styrenics LLC.
AmSty — based in The Woodlands, Texas — is a joint venture between Trinseo and Chevron Phillips Chemical Co. The firm is one of North America's largest PS makers.
Outside of styrencis, Trinseo's business units are latex binders, engineered materials (including acrylic sheet and resins) and base plastics (including ABS and polycarbonate).
Plans for Trinseo's styrenics sale came four months after the firm acquired acrylic sheet maker Aristech Surfaces LLC for $445 million. The Aristech acquisition was Trinseo's second major acrylic sheet deal in less than a year.
In December 2020, Trinseo bought the acrylic business of Arkema SA for almost $1.4 billion. That Arkema deal included the Plexiglas brand in the Americas. Trinseo also made a major divestment in May 2021 when it sold its synthetic rubber business to Poland's Synthos SA in a deal valued at $491 million.
On a conference call with stock analysts in late 2021, Bozich said he expected the styrenics sale to attract three types of buyers: strategics in the same value chain, regional players who want exposure to North American and European styrenics markets and financial sponsors who are looking to do a roll-up and aggregate assets with high cash-on-cash return.
AmSty operates five PS resin plants in the U.S., as well as one in Colombia and a stryrene monomer unit in St. James, La. Other Trinseo units covered by the sale are PS units in Belgium, Germany, Hong Kong and Indonesia and styrene monomer units in Germany and the Netherlands.