DSM sells polymer intermediates, resin business to equity firm CVC

In a bid to accelerate its refocus on supplying higher value nutritional ingredients and performance materials, Dutch chemical maker Royal DSM NV is selling a majority stake in a basic plastics and resins business to private equity firm CVC Capital Partners Ltd.

DSM and CVC will form a new company with three business units: composite resins, caprolactam and acrylonitrile. The new company – provisionally called NewCo – will have sales of more than US$2 billion a year and employ 1,950 employees, and will be 65 per cent owned by CVC, with DSM having the remaining 35 per cent.

In a statement, DSM described the proposed transaction as “a logical step in the execution of its strategy”, as polymer intermediates (caprolactam, acrylonitrile) and composite resins no longer fit with its “more resilient portfolio in nutrition and performance materials.”

NewCo will continue to supply at least 80 per cent of DSM’s caprolactam needs in Europe and North America for the coming 15 years via a drawing rights contract, the statement continued. “In China, DSM will continue to be supplied by NewCo as today,” the statement said. “This secures an ongoing strategic and competitive position for the polyamide 6 business in which DSM is a global leader.”

“This proposed transaction delivers on the strategic actions DSM announced for these businesses in November 2014 and is a decisive step in further optimizing our portfolio and reducing our cyclicality,” said Feike Sijbesma, CEO of the managing board of Royal DSM. “NewCo will operate as an independent, dedicated company under the leadership of CVC. DSM can now focus fully on improving the operational performance of its nutrition and performance materials businesses as well as benefitting from the future value creation in this new venture.”

Financial terms of the sale have not been disclosed. The deal is expected to close in the third quarter of 2015.