Specialty Chemicals Quarterly
First Quarter 2015
SPECIALTY CHEMICALS REVIEW
Market Commentary
Global Adhesives and Sealants Market
 The global adhesives and sealants market, which totaled approximately $13.8 billion in 2012, is expected to grow 3-4%
in 2015. Regionally, North America is expected to grow 3-4%, 2-3% in Europe and 5-6% in Asia, according to IHS.
Cheaper oil and petrochemical feedstocks are expected to drive down raw material costs and modestly boost margins.
Demand is expected to rise from industrial assembly applications, particularly automotive, as well as emerging markets
with expanding consumer purchasing power.
NPE2015 Takeaways
 Companies at the 2015 International Plastics Showcase generally expressed optimistic views on plastics markets.
Producers expect polyethylene prices to remain healthy as a result of sustained demand, despite the recent drop in
crude oil markets, particularly in emerging markets driven partly by urbanization in countries such as China and India.
Styrenic resin is expected to benefit from relatively strong demand in the short term as a result of inventory
replenishment along the value chain. In the medium-to-long term, styrenic resin is expected to be driven by growth in the
U.S. economy, aided by lower crude oil prices which will likely increase the average household disposable income. Over
the next decade, materials such as acrylonitrile butadiene styrene (“ABS”) and specialty resins will grow and will be
primarily driven by megatrends in the automotive, healthcare and electronics industries.
Mergers & Acquisitions and Capital Markets Update (see pg. 3-10)
 On March 27, Olin agreed to acquire the Chlor-Alkali and Downstream Derivatives Businesses from the Dow Chemical
Company for $5.1 billion (1.1x 2014 sales and 8.0x 2014 EBITDA).
 On March 16, A. Schulman agreed to acquire Citadel Plastics Holdings, the West Chicago, Illinois-based manufacturer
and distributer of thermoplastic compounds and thermoset resins, from HGGC and Charlesbank Capital Partners for
$800 million (1.5x 2014 sales and 10.7x 2014 EBITDA). KeyBanc Capital Markets acted as the exclusive sell-side
financial advisor to Citadel Plastics.
 On March 16, CVC Capital Partners agreed to acquire the Polymer Intermediates and Composite Resins Businesses of
Royal DSM for $630 million (0.3x 2014 pro-forma sales and 5.9x 2014 pro-forma EBITDA).
 On February 3, Tronox agreed to acquire FMC Alkali Chemicals, the Philadelphia, Pennsylvania-based producer of
natural soda-ash for $1.6 billion (2.1x 2014 sales and 7.2x 2014 EBITDA).
Source: Company Filings, Press Releases, IHS Chemical Week, ICIS, Plastic News, American Chemistry Council
Markets Update (see pg. 11)
 The KeyBanc Capital Markets’ (“KBCM”) Specialty Chemicals Index increased 3.7% in Q1’15, compared to a 0.4%
increase in the S&P 500. The Chemical Index is up 1.3% over the last year vs. an 10.4% increase for the S&P 500.
Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member
NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities
representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was not issued by our research department. The information
contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. This report does not purport to be a
complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general information purposes only and does
not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.
1
Specialty Chemicals Quarterly
First Quarter 2015
RAW MATERIAL PRICE TRENDS (Through March 31, 2015)
Natural Resources
Cru d e O il
Natu ral G as
End of Month Price
$47.60
$2.62
MoM % Change
(4.0%)
(7.6%)
YoY % Change
(53.1%)
(41.3%)
NAT . RE S O URCE S
$1.00
MoM % Change
(9.2%)
(11.8%)
YoY % Change
(15.4%)
(33.6%)
$2.5
$100
$4.8
$2.1
$75
$3.6
$50
$2.4
$25
$1.2
Sep-14
Crude Oil (WTI)
US$ / MT
$6.0
Jun-14
$1.7
$1.3
$0.9
$0.0
Mar-15
Dec-14
Nat. Ru b b er
$1.65
$125
$0
Mar-14
P alm O il
End of Month Price
US$ / MMBtu
US$ / bbl
E NE RG Y
$0.5
Mar-14
Nat. Gas (Henry Hub)
Jun-14
Sep-14
Palm Oil (Rotterdam)
Dec-14
Mar-15
Nat. Rubber (Singapore)
Petrochemicals (Gulf Coast)
O L E F INS
E th ylen e
P rop ylen e
$0.34
$0.37
MoM % Change
(2.9%)
YoY % Change
(34.8%)
End of Month Price
ARO M AT ICS
Ben z en e
T olu en e
End of Month Price
$2.55
$2.50
$0.54
(10.5%)
MoM % Change
8.1%
0.4%
12.9%
(40.0%)
YoY % Change
(46.9%)
(32.1%)
$0.8
US$ / gal
$0.6
$0.5
$0.4
$0.3
Mar-14
(24.7%)
$6.0
$1.0
$5.0
$0.8
$4.0
$0.6
$3.0
$0.4
$2.0
$0.2
$1.0
Jun-14
Sep-14
Ethylene
Dec-14
$0.0
Mar-14
Mar-15
Propylene
US$ / lb
US$ / lb
$0.7
S tyren e
Jun-14
Benzene
Sep-14
$0.0
Mar-15
Dec-14
Toluene
Styrene
L DP E
Plastics
P L AS T ICS
PP
PS
PVC
P L AS T ICS
HDP E
$0.94
$1.18
$1.13
End of Month Price
$0.92
$1.02
YoY % Change
($0.18)
($0.15)
0.9%
YoY % Change
(12.4%)
(11.3%)
2-Year % Change
(21.0%)
(3.3%)
8.7%
2-Year % Change
(2.1%)
0.0%
End of Month Price
$1.4
$1.6
$1.2
US$ / lb
US$ / lb
$1.4
$1.2
$1.0
$0.8
$0.8
$0.6
Mar-13
$1.0
Sep-13
PP
Mar-14
PS
Sep-14
Mar-15
PVC
$0.6
Mar-13
Sep-13
HDPE
Mar-14
Sep-14
Mar-15
LDPE
Source: Bloomberg
2
Specialty Chemicals Quarterly
First Quarter 2015
SELECT RECENT TRANSACTION ACTIVITY
Closed
(Announced)
3/31/2015
(3/31/2015)
Acquirer
(Parent)
PPG Industries
Inc.
Target
(Seller)
The Flood Company
Australia
Highlights
 PPG Industries acquired certain assets of The Flood Company Australia, the
Australian-based manufacturer and distributer of specialty wood stain and paint
additive solutions
 The acquisition allows PPG to further expand its architectural paint and coatings
offering and establish a position in wood care in Australia
Pending
(3/27/2015)
Olin Corp.
Chlor-Alkali and
Downstream
Derivatives
Businesses
(The Dow Chemical
Company)
 Olin agreed to acquire the Chlor-Alkali and Downstream Derivatives Businesses from
the Dow Chemical Company for $5.1 billion (1.1x 2014 sales and 8.0x 2014 EBITDA)
 The deal will be structured as a Reverse Morris Trust and will result in Dow
shareholders receiving approximately 50.5% of the shares of Olin with existing Olin
shareholders owning 49.5%
 The Chlor-Alkali and Downstream Derivatives Businesses generated 2014 sales and
EBITDA of $4.8 billion and $640 million, respectively
Pending
(3/19/2015)
Pending
(3/19/2015)
International
Chemical
Investors Group
S.E.
The Remedy
Business
(INEOS and Solvay
S.A.)
 International Chemical Investors Group (“ICIG”) agreed to acquire the Remedy
Business of INEOS and Solvay
SK Capital
Partners
AEB SpA
(Investindustrial)
 SK Capital Partners agreed to acquire AEB, the Italian-based provider of
biotechnology solutions, processing aids and specialized equipment for winemakers,
beer brewers and other food and beverage products
 The Remedy Business includes chlorine, ethylene dichloride (“EDC”), polyvinyl
chloride (“PVC”) and vinyl chloride monomer (“VCM”) plants throughout Europe; in
addition, the membrane chlorine plant at Runcorn, U.K. is to be placed in a 50 / 50
joint venture between INOVYN™ and ICIG
 The acquisition will provide AEB with the partners necessary to support the
Company’s next phase of growth
3/18/2015
(3/18/2015)
W.F. Young, Inc.
Unicorn Editions,
Ltd.
 W.F. Young acquired Unicorn Editions, the Plains, Virginia-based solutions provider
for cleaning, conditioning and restoring leather and vinyl products
 Unicorn Editions’s Leather Therapy line will complement W.F. Young’s One-Step®
products as well as strengthen W.F. Young’s position in the leather care market
3/17/2015
(3/17/2015)
3/31/2015
(3/17/2015)
Transilwrap
Company, Inc.
(The Jordan
Company)
CLEAR FOCUS
Imaging, Inc.
Sika AG
Axson
Technologies S.A.
(BSR Group)
 Transilwrap Company acquired CLEAR FOCUS Imaging, the Santa Rosa, Californiabased manufacturer of printable plastic films for large-scale display advertising
 The acquisition expands and strengthens Transilwrap’s value-added manufacturing
capabilities to support growth in new market segments
 Sika acquired Axson Technologies, the French-based manufacturer and supplier of
epoxy and polyurethane polymer formulations for design, prototyping and tooling,
structural adhesives, composite materials and encapsulation products
 The acquisition enables Sika to increase its product offering and expertise in its
Tooling and Composites business
 Axson Technologies generated 2014 sales of $61.9 million
Source: Company Filings, ChemWeek, Press Releases, Capital IQ
3
Specialty Chemicals Quarterly
First Quarter 2015
SELECT RECENT TRANSACTION ACTIVITY
Closed
(Announced)
Acquirer
(Parent)
Pending
(3/16/2015)
A. Schulman Inc.
Target
(Seller)
Citadel Plastics
Holdings
(HGGC, LLC and
Charlesbank
Capital Partners
LLC)
Highlights
 A. Schulman agreed to acquire Citadel Plastics Holdings, the West Chicago, Illinoisbased manufacturer and distributer of thermoplastic compounds and thermoset
resins, from HGGC and Charlesbank Capital Partners for $800 million (1.5x 2014
sales and 10.7x 2014 EBITDA)
 The acquisition enhances A. Schulman’s existing portfolio and presents attractive
expansion opportunities in other fast-growing sectors such as aerospace, medical,
LED lighting and oil & gas
 Citadel Plastics represents A. Schulman’s eleventh acquisition since 2010
 Citadel Plastics generated 2014 sales and EBITDA of $525 million and $75 million,
respectively
KeyBanc Capital Markets acted as the exclusive sell-side financial advisor to
Citadel Plastics Holdings
Pending
(3/16/2015)
CVC Capital
Partners
Polymer
Intermediates and
Composite Resins
Businesses
(Royal DSM)
 CVC Capital Partners agreed to acquire the Polymer Intermediates and Composite
Resins Businesses of Royal DSM for $630 million (0.3x 2014 pro-forma sales and
5.9x 2014 pro-forma EBITDA)
 The acquisition, which will be 65% owned by CVC and 35% by Royal DSM, will
provide the partners necessary to support the Polymer Intermediates and Composite
Resin Business’s next phase of growth
 The Polymer Intermediates and Composite Resin Business generated 2014 proforma revenue and EBITDA of $2.2 billion and $111.3 million, respectively
3/16/2015
(3/16/2015)
MCM Capital
Partners
Performance
Plastics, Ltd.
 MCM Capital Partners acquired Performance Plastics, the Cincinnati, Ohio-based
custom injection molding company
 The acquisition provides Performance Plastics with the partners necessary to support
the Company’s next phase of growth
Pending
(3/12/2015)
Solvay S.A.
ERCA Emery
Surfactant B.V.
Facility
(Emery
Oleochemicals and
ERCA Group)
 Solvay agreed to acquire the ERCA Emery Surfactant B.V. alkoxylation facility
 The on-pipe facility, commissioned in 2014, benefits from a competitive and secure
supply of the key raw material ethylene oxide via pipeline from the industrial park,
which is located between the key regional transport and logistics hubs of Rotterdam
and Antwerp, Belgium
 The acquisition will strengthen Solvay’s strategy of securing sustainable, large-scale
surfactant assets worldwide
03/11/2015
(03/11/2015)
03/16/2015
(03/5/2015)
One Rock Capital
Partners, LLC
Armacell
International S.A.
(Armacell GmbH)
Compass Chemical
International LLC
(BMMC Holdings
LLC)
 One Rock Capital Partners acquired Compass Chemical International, the Smyma,
Georgia-based producer of organophosphonates
Industrial Thermo
Polymers Limited
 Armacell International acquired Industrial Thermo Polymers (“ITP”), the Canadanbased manufacturer of extruded polyethylene insulation products
 Compass Chemical should be able to leverage One Rock’s chemicals industry
experience to expand its customer base and service offerings
 The acquisition positions Armacell International at top of the Canadian market in
extruded polyethylene insulation foams, strengthening its overall market position in
the North America, while adding significant technological capabilities
 ITP generated 2014 sales of $25.9 million
Source: Company Filings, ChemWeek, Press Releases, Capital IQ
4
Specialty Chemicals Quarterly
First Quarter 2015
SELECT RECENT TRANSACTION ACTIVITY
Closed
(Announced)
3/2/2015
(3/2/2015)
Acquirer
(Parent)
Arkema S.A.
Target
(Seller)
OXIDO s.r.l.
Highlights
 Arkema acquired OXIDO, the Italian-based manufacturer of organic peroxides
 The acquisition consolidates Arkema’s leading position in the organic peroxides
sector and enriches its range of products for the cable, automotive and construction
industries
 OXIDO generated 2014 sales of $22.1 million
3/2/2015
(3/2/2015)
Pending
(2/26/2015)
Bayer
MaterialScience
AG
(Bayer AG)
Thermoplast
Composite GmbH
(Herbert Börger,
Ingolf Knaup and
others)
 Bayer MaterialScience acquired Thermoplast Composite (“TCG”), the German-based
producer of thermoplastic fiber composites
ALTIVIA
Corporation
(Brenntag AG)
Specialty Phosgene
Derivatives
Business
(Axiall Corporation)
 ALTIVIA agreed to acquire the Specialty Phosgene Derivatives Business of Axiall,
which includes the La Porte, Texas chemical production facility
 The acquisition strengthens Bayer MaterialScience’s position in the future-oriented
market for composite materials and provides access to TCG’s technological patents
 The acquisition will enable ALTIVIA to produce new products for specialized
applications and create sufficient scale to compete globally
 The La Porte chemical plant is the largest North American production facility of
merchant phosgene derivatives, including chloroformates and acid chlorides
Pending
(2/26/2015)
2/25/2015
(2/25/2015)
Bachem
Americas, Inc.
(Bachem Holding
AG)
American Peptide
Company, Inc.
(Otsuka Holdings
Company, Ltd.)
 Bachem Americas agreed to acquire American Peptide Company, the Irvine,
California-based manufacturer of peptide and protein research tools for life science,
biotech and pharmaceutical communities
Ferro Corporation
TherMark Holdings,
Inc.
 Ferro acquired TherMark Holdings, the Irvine, California-based producer of laser
marking technology and materials for approximately $5.5 million
 The acquisition will strengthen Bachem’s position in the U.S. and provide immediate
access to additional large-scale production capacity for its growing global project
portfolio
 The acquisition complements Ferro’s Performance Colors and Glass industrial
products portfolio and provides the Company access to the fast-growing, high-value
niche laser marking industry
Pending
(2/23/2015)
Pending
(2/12/2015)
Tekni-Plex
Europe N.V.
(American
Securities)
Pharmaceutical
Blister Film and
Adhesive Tape
Substrate Film
Businesses
(Gallazzi Spa)
 Tekni-Plex Europe agreed to acquire the Pharmaceutical Blister Film and Adhesive
Tape Substrate Businesses of Gallazzi
Pyrolyx AG
Carbon Clean Tech
AG
 Pyrolyx agreed to acquire Carbon Clean Tech, the German-based manufacturer of
recovered carbon black
 The acquisition will add mono‐polyvinyl chloride (“PVC”) calendaring capabilities to
Tekni-Plex’s blister portfolio in Europe, as well as state‐of‐the‐art polyvinylidene
chloride (“PVDC”) coating, strengthening the Company’s barrier blister technology
base
 The acquisition will enable Pyrolyx to expand its production capacity and accelerate
its rate of innovation
 Pyrolyx will become the world’s largest producer of recovered carbon black from
post-consumer rubber and tires
Source: Company Filings, ChemWeek, Press Releases, Capital IQ
5
Specialty Chemicals Quarterly
First Quarter 2015
SELECT RECENT TRANSACTION ACTIVITY
Closed
(Announced)
Pending
(2/11/2015)
Acquirer
(Parent)
Tessenderlo
Kerley, Inc.
(Tessenderlo
Chemie NV)
Target
(Seller)
Herbicide Assets of
Norflurazon
(Syngenta Crop
Protection, LLC)
Highlights
 Tessenderlo Kerley agreed to acquire the Herbicide Assets of Norflurazon
(SOLICAM®) from Syngenta Crop Protection
 SOLICAM® is used to control grass and broadleaf weeds in citrus, alfalfa, peanuts,
tree fruits, nuts, caneberries, grapes, asparagus and other crops
 The acquisition expands Tessenderlo Kerley’s portfolio of niche crop protection
products and provides customers with continued access to the herbicide
2/9/2015
(2/9/2015)
Nautic Partners,
LLC
IPS Corporation
(Calera Capital)
 Nautic Partners has partnered with management to acquire IPS Corporation, the
Compton, California-based provider of solvent cements, specialty plumbing products
and specialty adhesives
 IPS has operations throughout the U.S., as well as the U.K and China, and a
worldwide network of sales representatives and distributors
4/1/2015
(2/3/2015)
Tronox Limited
FMC Alkali
Chemicals, Inc.
(FMC Corp.)
 Tronox acquired FMC Alkali Chemicals, the Philadelphia, Pennsylvania-based
producer of natural soda-ash for $1.6 billion (2.1x 2014 sales and 7.2x 2014 EBITDA)
 The acquisition diversifies Tronox’s end market exposure and increases its
participation in faster growing developing economies
 FMC Alkali Chemicals is expected to generate 2014 sales and EBITDA of $800
million and $228 million, respectively
2/3/2015
(2/3/2015)
Frutarom
Industries Ltd
FoodBlenders
Limited
 Frutarom Industries acquired FoodBlenders, the U.K.-based producer of convenience
mixes and ingredients for the bakery, ready meal and meat processing industries for
$2.4 million (0.8x 2014 sales)
 The acquisition will generate synergies between FoodBlenders’ activity and
Frutarom’s expanding savory activity in the U.K. and globally
 FoodBlenders generated 2014 sales of $3 million
2/3/2015
(2/3/2015)
3/11/2015
(2/2/2015)
VWR Corporation
(Varietal
Distribution
Holdings, LLC)
National
Biochemicals Corp.
Hempel A/S
(Hempel Holding
A/S)
JONES-BLAIR
Company
 VWR acquired National Biochemicals (“NBC”), the Twinsburg, Ohio-based
manufacturer and supplier of molecular biology reagents, multi-compendial chemicals
and biotechnology and diagnostic biochemicals
 The acquisition enables VWR to more effectively leverage its infrastructure to provide
enhanced solutions to its customers and strengthen its position in the biotech,
pharmaceutical, cell culture and diagnostics industries
 Hempel acquired the JONES-BLAIR Company, the Dallas, Texas-based
manufacturer of decorative, protective and elastomeric coating solutions
 The acquisition is part of Hempel’s strategy to become one of the world’s top-10
largest coatings suppliers by the end of 2015
 JONES-BLAIR represents Hempel’s third acquisition in the last five months
2/2/2015
(2/2/2015)
Chase
Corporation
Microspheres and
Polyurethane
Intermediates
Business
(Henkel Family
Trust)
 Chase acquired the Microspheres and Polyurethane Intermediates Business of
Henkel Corporation for $33.3 million
 The acquisition is in-line with Chase’s corporate strategy to broaden its specialty
chemical expertise
Source: Company Filings, ChemWeek, Press Releases, Capital IQ
6
Specialty Chemicals Quarterly
First Quarter 2015
SELECT RECENT TRANSACTION ACTIVITY
Closed
(Announced)
Pending
(1/30/2015)
1/30/2015
(1/30/2015)
Pending
(1/29/2015)
Acquirer
(Parent)
Target
(Seller)
Highlights
Aerospace and
Automotive
Sealants
Businesses
(Le Joint Francais
SNC)
 PPG Industries agreed to acquire the Aerospace and Automotive Sealants
Businesses of Le Joint Francais (“LJF”)
The Lubrizol
Corporation
(Berkshire
Hathaway Inc.)
EcoQuimica
Industria e
Comercio Produtos
Quimica Ltda.
 Lubrizol acquired EcoQuimica Industria e Comercio Produtos Quimica, the Brazilianbased manufacturer and supplier of coatings technology for products sold into
decorative paints, textiles, cement, elastomeric coatings and paper coatings
Investcorp Bank
B.S.C.
Fritta, S.L.
(Nazca Capital,
SGECR, S.A.)
 Investcorp Bank agreed to acquire Fritta, the Spanish-based designer and
manufacturer of frits, glazes, ceramic colors and inkjet inks
PPG Industries
Inc.
 The acquisition will enable PPG to serve its aerospace and automotive customers
with greater geographic reach and a wider array of automotive products
 LJF has been a licensee of PPG’s technology for more than 60 years
 The acquisition expands Lubrizol’s performance coatings footprint in the Latin
American marketplace
 The acquisition will provide Fritta with the partners necessary to support the
Company’s next phase of growth
 Fritta is expected to generate 2014 sales and EBITDA of $88 million and $14 million,
respectively
2/10/2015
(1/27/2015)
ALLETE, Inc.
U.S. Water
Services, Inc.
(Excellere Partners)
 ALLETE acquired an 87% stake in U.S. Water Services, the St. Michael, Minnesota
based provider of chemicals and equipment for water management and treatment to
industrial customers for $194 million (1.6x 2014 sales)
 The acquisition is consistent with ALLETE’s strategy of investing in energy
infrastructure and related services to complement its core regulated utility, reducing
cyclicality and generating long-term earnings growth
 U.S. Water Services generated 2014 sales of $120 million
1/20/2015
(1/20/2015)
J6 Polymers, LLC
Specialty
Polyurethane
Systems Business
(Stepan Company)
 J6 Polymers acquired Stepan Company’s Millsdale, Illinois-based Specialty
Polyurethanes Systems Business (“KITS”)
 The transaction allows Stepan’s polymer business segment to redeploy resources to
further improve growth and innovation in its line of polyols for coatings, adhesives,
sealants and elastomers applications
 The business generated 2014 sales of $2.8 million
1/16/2015
(1/16/2015)
Koppers Inc.
(Koppers
Holdings Inc.)
Creosote
Distribution
Business
(KMG Chemicals)
 Koppers acquired the Creosote Distribution Business of KMG Chemicals for $15.5
million (including the fair market value of inventory, estimated at $3 million)
 The acquisition also includes the transfer of leased railcars and storage tanks, as well
as various customer agreements from KMG Chemicals to Koppers
 The acquisition provides a steady supply of creosote, an important component of the
railroad crosstie treating process, while the strategic location of leased tank space
provides an attractive option for importing coal tar
1/9/2015
(1/9/2015)
Royal Adhesives
& Sealants, LLC
(Arsenal Capital
Partners )
Advanced Polymers
International
(PCI Paper
Conversions Inc.)
 Royal Adhesives & Sealants acquired Advanced Polymers International, the
Syracuse, New York-based manufacturer of microsphere-based adhesives
 The acquisition provides Royal Adhesives & Sealants a niche, value-added adhesive
technology that can be customized to provide adhesive solutions to customers
worldwide
Source: Company Filings, ChemWeek, Press Releases, Capital IQ
7
Specialty Chemicals Quarterly
First Quarter 2015
SELECT RECENT TRANSACTION ACTIVITY
Closed
(Announced)
Acquirer
(Parent)
Pending
(1/7/2015)
Sumitomo Rubber
Industries Ltd.
Target
(Seller)
Lonstroff AG
(BV Holding AG)
Highlights
 Sumitomo Rubber Industries agreed to acquire Lonstroff, the Swiss-based
manufacturer of elastomers for industrial and pharmaceutical markets for $43.7
million (0.9x 2014 sales)
 The acquisition secures production facilities in Europe for Sumitomo’s medical
packaging materials and medical rubber parts, which have significant growth
potential
 Lonstroff generated 2014 sales of $44.5 million
12/31/2014
(1/1/2015)
2/9/2015
(12/29/2014)
SRF Limited
(Kama Holdings
Ltd.)
Pamplona Capital
Management
Dymel
Pharmaceutical
Propellant
Business
(E. I. du Pont de
Nemours and
Company)
 SRF acquired the Dymel Pharmaceutical Propellant Business (“Dymel”) of E. I. du
Pont de Nemours and Company for approximately $20 million
Charter Nex Films
(Mason Wells)
 Pamplona Capital Management acquired Charter Nex Films, the Milton, Wisconsinbased producer of high-performance blown polyethylene films
 Dymel provides a non-ozone depleting alternative propellant for use in the
pharmaceutical industry
 The acquisition provides SRF with immediate access to the niche pharmaceutical
segment at a global level
 The acquisition provides Charter Nex Films with the partners necessary to support
the Company’s next phase of growth
Pending
(12/3/2014)
Valent U.S.A.
Corporation
(Sumitomo
Chemical Co. Ltd)
Asana® Insecticide
Business
(E. I. du Pont de
Nemours and
Company)
 Valent U.S.A. agreed to acquire the Asana® Insecticide Business of E.I. du Pont de
Nemours and Company
 Asana® Insecticide is a proven control tool for a wide range of insect pests in major
field crops, vegetables, tree fruits and nuts
 The acquisition broadens Valent U.S.A.’s range of solutions to meet the growing
demand of its customer’s insect management needs
Source: Company Filings, ChemWeek, Press Releases, Capital IQ
8
Specialty Chemicals Quarterly
First Quarter 2015
SPECIALTY CHEMICALS PUBLIC TRADING STATISTICS (Through March 31, 2015)
$ in millions, except per share data
Advanced Materials, Polymers
& Additives
Adhesives, Sealants &
Coatings
Company
Axalta Coating Systems, Ltd.
H.B. Fuller Company
PPG Industries, Inc.
Quaker Chemical Corporation
RPM International Inc.
Sherwin-Williams Company
Valspar Corporation
Ticker
AXTA
FUL
PPG
KWR
RPM
SHW
VAL
Stock
Market
Price
Cap.
$27.62
$42.87
$225.54
$85.64
$47.99
$284.50
$84.03
$6,348
$2,158
$30,685
$1,141
$6,419
$26,998
$6,827
Diversified
1 month
3 months
1 year
Value
EBITDA
EV / LTM
EBITDA
Margin
EBITDA
(2.7%)
(4.1%)
(4.2%)
5.5%
(5.1%)
(0.2%)
(3.0%)
6.1%
(3.7%)
(2.4%)
(7.0%)
(5.4%)
8.2%
(2.8%)
NA
(11.2%)
16.6%
8.6%
14.7%
44.3%
16.5%
$9,731
$2,855
$33,607
$1,160
$7,688
$28,762
$8,342
$4,362
$2,089
$15,386
$766
$4,498
$11,213
$4,558
$805
$208
$2,359
$95
$566
$1,506
$706
18.5%
10.0%
15.3%
12.4%
12.6%
13.4%
15.5%
12.1x
13.7x
14.2x
12.2x
13.6x
19.1x
11.8x
(2.0%)
(3.0%)
(1.0%)
(2.8%)
14.9%
15.6%
$13,163
$8,342
$6,125
$4,498
$892
$706
14.6%
15.7%
13.8x
13.6x
13.2%
(13.6%)
2.9%
(1.6%)
8.1%
5.0%
0.1%
1.4%
4.3%
7.0%
(6.0%)
1.4%
18.9%
7.3%
17.0%
(3.2%)
23.9%
8.6%
(2.8%)
18.4%
0.8%
4.8%
(1.5%)
3.9%
32.9%
(6.9%)
10.7%
(8.1%)
18.1%
2.6%
(22.7%)
22.3%
(9.6%)
(17.8%)
1.9%
(35.5%)
$1,664
$3,556
$4,463
$1,278
$5,299
$1,223
$972
$6,227
$829
$712
$4,114
$1,118
$2,430
$5,791
$2,034
$1,112
$1,866
$961
$1,230
$2,319
$1,068
$968
$3,836
$1,927
$154
$306
$305
$133
$387
$139
$123
$414
$98
$68
$435
$159
6.3%
5.3%
15.0%
11.9%
20.7%
14.5%
10.0%
17.8%
9.2%
7.0%
11.3%
8.2%
10.8x
11.6x
14.6x
9.6x
13.7x
8.8x
7.9x
15.0x
8.5x
10.5x
9.5x
7.1x
1.9%
2.1%
8.0%
6.1%
(1.0%)
(2.5%)
$2,621
$1,471
$2,128
$1,896
$227
$156
10.6%
8.2%
10.6x
10.1x
(6.6%)
(0.2%)
1.4%
(0.3%)
(2.2%)
4.0%
(7.0%)
(9.7%)
(1.3%)
22.1%
(0.2%)
14.3%
9.4%
7.8%
(0.3%)
2.4%
(12.1%)
6.3%
10.5%
2.6%
(6.8%)
10.4%
(8.7%)
0.4%
(2.7%)
(24.2%)
5.3%
40.7%
5.9%
17.8%
3.6%
12.4%
(20.4%)
28.0%
4.5%
(23.8%)
0.6%
7.9%
(19.7%)
(25.2%)
(9.2%)
(52.3%)
13.2%
16.0%
NA
8.7%
(0.3%)
(3.8%)
$7,211
$10,837
$4,662
$4,086
$10,889
$1,969
$17,749
$9,281
$9,959
$1,217
$3,774
$2,901
$1,803
$9,732
$8,683
$602
$3,914
$6,080
$4,569
$3,561
$6,547
$2,190
$9,527
$4,038
$11,578
$1,555
$1,725
$2,241
$1,318
$4,415
$3,243
$702
$981
$1,104
$393
$540
$1,062
$217
$2,056
$846
$1,266
$101
$319
$357
$225
$1,313
$576
$47
25.1%
18.2%
8.6%
15.2%
16.2%
9.9%
21.6%
21.0%
10.9%
6.5%
18.5%
15.9%
17.1%
29.7%
17.8%
6.7%
7.4x
9.8x
11.9x
7.6x
10.3x
9.1x
8.6x
11.0x
7.9x
12.0x
11.8x
8.1x
8.0x
7.4x
15.1x
12.8x
2.1%
(0.2%)
3.8%
4.5%
(5.0%)
(0.3%)
$6,585
$5,937
$4,200
$3,738
$713
$558
17.0%
14.9%
9.9x
9.4x
(5.8%)
(6.0%)
0.4%
(3.7%)
8.3%
0.1%
(8.6%)
(16.9%)
(3.6%)
15.8%
14.2%
0.7%
(50.9%)
6.3%
(0.6%)
22.7%
22.1%
48.1%
$404
$1,996
$1,310
$9,947
$3,720
$15,946
$299
$541
$839
$3,089
$1,427
$2,785
$29
$114
$142
$688
$270
$847
9.8%
21.0%
17.0%
22.3%
19.0%
30.4%
13.9x
17.6x
9.2x
14.4x
13.8x
18.8x
Average
Median
(1.1%)
(1.8%)
0.3%
(1.4%)
7.9%
14.2%
$5,554
$2,858
$1,497
$1,133
$348
$206
23.3%
18.2%
Overall Average
Overall Median
0.9%
(0.2%)
3.7%
3.6%
1.3%
2.6%
Average
Median
A. Schulman, Inc.
Calumet Specialty Products Partners
Cytec Industries Inc.
Ferro Corporation
Hexcel Corporation
Innospec Inc.
Kraton Performance Polymers, Inc.
NewMarket Corporation
OM Group, Inc.
OMNOVA Solutions Inc.
PolyOne Corporation
Stepan Company
SHLM
CLMT
CYT
FOE
HXL
IOSP
KRA
NEU
OMG
OMN
POL
SCL
$48.20
$24.05
$54.04
$12.55
$51.42
$46.39
$20.21
$477.80
$30.03
$8.53
$37.35
$41.66
$1,403
$1,822
$3,854
$1,095
$4,954
$1,127
$637
$5,946
$908
$400
$3,328
$928
Average
Median
Albemarle Corporation
Ashland Inc.
Axiall Corporation
Cabot Corporation
Celanese Corporation
Chemtura Corporation
Eastman Chemical Co.
FMC Corp.
Huntsman Corporation
Koppers Holdings Inc.
Minerals Technologies Inc.
Olin Corp.
Orion Engineered Carbons SA
Westlake Chemical Corporation
W.R. Grace & Co.
Zep Inc.
ALB
ASH
AXLL
CBT
CE
CHMT
EMN
FMC
HUN
KOP
MTX
OLN
OEC
WLK
GRA
ZEP
$52.84
$127.31
$46.94
$45.00
$55.86
$27.29
$69.26
$57.25
$22.17
$19.68
$73.10
$32.04
$18.00
$71.94
$98.87
$17.03
$5,926
$8,818
$3,296
$2,867
$8,691
$1,831
$10,318
$7,644
$5,440
$403
$2,537
$2,482
$1,073
$9,558
$7,219
$393
Average
Median
Fine Chemicals
LTM
Revenue
Stock Performance (% Change) Enterprise
American Vanguard Corp.
Balchem Corp.
Innophos Holdings Inc.
International Flavors & Fragrances Inc.
Sensient Technologies Corp.
Sigma-Aldrich Corporation
AVD
BCPC
IPHS
IFF
SXT
SIAL
$10.62
$55.38
$56.36
$117.40
$68.88
$138.25
$310
$1,714
$1,211
$9,480
$3,273
$16,515
Consensus EBITDA
2015P
$876
$286
$2,724
$101
$662
$1,824
$751
2016P
2016P
11.1x
10.0x
12.3x
11.5x
11.6x
15.8x
11.1x
10.2x
9.0x
11.4x
10.7x
10.3x
14.2x
10.5x
12.1x
11.6x
11.0x
10.6x
8.7x
8.7x
10.3x
7.7x
12.5x
8.1x
6.8x
14.8x
7.7x
7.3x
8.6x
6.1x
7.6x
7.6x
9.1x
7.0x
11.1x
7.9x
5.5x
15.2x
6.6x
NA
7.8x
5.7x
8.9x
8.3x
8.3x
7.6x
8.0x
9.2x
8.1x
7.3x
7.7x
8.3x
7.9x
10.5x
6.8x
7.3x
9.4x
7.9x
8.2x
8.0x
11.3x
10.3x
7.4x
8.5x
7.0x
6.8x
7.2x
7.0x
7.5x
9.1x
5.8x
6.7x
8.9x
4.4x
7.7x
7.5x
10.3x
9.8x
8.5x
8.0x
7.6x
7.4x
8.2x
12.3x
8.8x
13.9x
13.5x
18.7x
6.8x
10.7x
8.2x
12.9x
12.2x
17.8x
14.6x
14.2x
12.5x
12.9x
11.4x
11.4x
11.5x
11.6x
9.8x
8.7x
8.9x
8.1x
$192
$410
$435
$165
$424
$151
$143
$420
$108
$97
$480
$185
$900
$1,177
$578
$559
$1,413
$238
$2,234
$887
$1,471
$166
$402
$366
$220
$1,214
$771
$58
$50
$162
$149
$718
$276
$855
$953
$316
$2,938
$108
$747
$2,026
$797
EV / EBITDA
2015P
$220
$465
$488
$182
$476
$156
$176
$411
$126
NA
$526
$195
$980
$1,280
$668
$599
$1,514
$281
$2,365
$1,015
$1,703
$182
$422
$653
$235
$1,292
$845
$62
$59
$187
$159
$769
$306
$898
Source: Capital IQ, Reuters, SEC Filings
9
Specialty Chemicals Quarterly
First Quarter 2015
SPECIALTY CHEMICALS PUBLIC TRADING STATISTICS (Through March 31, 2015)
Advanced Materials, Polymers
& Additives
Adhesives, Sealants &
Coatings
$ in millions
Company
Ticker
Axalta Coating Systems, Ltd.
H.B. Fuller Company
PPG Industries, Inc.
Quaker Chemical Corporation
RPM International Inc.
Sherwin-Williams Company
Valspar Corporation
AXTA
FUL
PPG
KWR
RPM
SHW
VAL
Total
Net
Debt
Debt
$3,698
$764
$4,025
$76
$1,868
$1,805
$1,706
$3,316
$692
$2,837
$11
$1,584
$1,765
$1,515
LTM EBITDA
$805
$208
$2,359
$95
$566
$1,506
$706
Diversified
Net Debt /
Total Debt /
LTM EBITDA /
LT S&P
LTM EBITDA
Capital
Interest
Rating
4.6x
3.7x
1.7x
0.8x
3.3x
1.2x
2.4x
4.1x
3.3x
1.2x
0.1x
2.8x
1.2x
2.1x
76.9%
46.7%
43.3%
17.2%
60.2%
64.4%
63.9%
3.8x
9.6x
12.6x
NM
7.1x
23.5x
10.7x
2.5x
2.4x
2.1x
2.1x
53.2%
60.2%
11.2x
10.2x
2.5x
5.6x
2.4x
2.4x
1.2x
1.0x
2.9x
0.9x
0.1x
6.0x
2.4x
1.7x
1.9x
5.6x
2.1x
1.3x
1.2x
0.7x
2.4x
0.6x
NM
4.8x
1.8x
1.2x
44.8%
67.9%
38.0%
48.1%
26.6%
21.5%
42.9%
47.7%
1.5%
75.3%
56.8%
33.8%
18.1x
2.8x
20.6x
8.2x
NM
NM
5.0x
17.5x
NM
2.1x
6.9x
13.5x
2.4x
2.4x
2.1x
1.8x
42.1%
43.9%
10.5x
8.2x
3.7x
3.0x
3.6x
2.2x
2.5x
2.6x
3.7x
2.0x
4.1x
8.4x
4.6x
1.9x
3.6x
0.6x
3.5x
4.6x
1.2x
1.8x
3.2x
2.0x
1.7x
0.6x
3.6x
1.9x
3.4x
7.9x
3.8x
1.2x
3.2x
NM
2.5x
4.6x
66.3%
49.6%
35.5%
37.4%
47.2%
35.3%
67.8%
52.3%
72.7%
91.0%
62.2%
40.0%
92.4%
19.3%
84.5%
52.7%
23.7x
6.8x
5.1x
10.0x
7.2x
4.8x
10.1x
14.2x
6.2x
2.6x
7.6x
8.2x
3.1x
NM
4.5x
4.1x
3.4x
3.6x
2.8x
2.5x
56.6%
52.5%
7.9x
6.8x
3.4x
2.9x
1.0x
1.4x
1.8x
0.5x
3.2x
2.5x
0.7x
0.7x
1.7x
NM
27.6%
45.9%
22.7%
38.2%
30.8%
12.4%
9.4x
22.1x
NM
14.9x
16.8x
NM
Average
Median
1.8x
1.6x
1.8x
1.7x
29.6%
29.2%
15.8x
15.9x
Overall Average
Overall Median
2.7x
2.5x
2.4x
2.0x
47.8%
46.7%
10.1x
8.2x
Average
Median
A. Schulman, Inc.
Calumet Specialty Products Partners
Cytec Industries Inc.
Ferro Corporation
Hexcel Corporation
Innospec Inc.
Kraton Performance Polymers, Inc.
NewMarket Corporation
OM Group, Inc.
OMNOVA Solutions Inc.
PolyOne Corporation
Stepan Company
SHLM
CLMT
CYT
FOE
HXL
IOSP
KRA
NEU
OMG
OMN
POL
SCL
$390
$1,714
$742
$312
$480
$142
$352
$374
$13
$410
$1,024
$274
$298
$1,703
$635
$172
$458
$95
$298
$254
($79)
$327
$785
$189
$154
$306
$305
$133
$387
$139
$123
$414
$98
$68
$435
$159
Average
Median
Albemarle Corporation
Ashland Inc.
Axiall Corporation
Cabot Corporation
Celanese Corporation
Chemtura Corporation
Eastman Chemical Co.
FMC Corp.
Huntsman Corporation
Koppers Holdings Inc.
Minerals Technologies Inc.
Olin Corp.
Orion Engineered Carbons SA
Westlake Chemical Corporation
W.R. Grace & Co.
Zep Inc.
ALB
ASH
AXLL
CBT
CE
CHMT
EMN
FMC
HUN
KOP
MTX
OLN
OEC
WLK
GRA
ZEP
$3,645
$3,275
$1,425
$1,183
$2,667
$574
$7,565
$1,712
$5,206
$851
$1,461
$675
$816
$764
$2,019
$219
$1,155
$2,019
$1,258
$1,095
$1,788
$137
$7,351
$1,603
$4,346
$799
$1,211
$418
$729
($117)
$1,461
$216
$981
$1,104
$393
$540
$1,062
$217
$2,056
$846
$1,266
$101
$319
$357
$225
$1,313
$576
$47
Average
Median
Fine Chemicals
Total Debt /
LTM EBITDA
American Vanguard Corp.
Balchem Corp.
Innophos Holdings Inc.
International Flavors & Fragrances Inc.
Sensient Technologies Corp.
Sigma-Aldrich Corporation
AVD
BCPC
IPHS
IFF
SXT
SIAL
$100
$333
$136
$942
$484
$445
$95
$282
$100
$463
$466
($569)
$29
$114
$142
$688
$270
$847
BBB
ABBBA
BBB
B+
BBBB+
BBBB+
BBB+
B
BB
-
BBBBB
BB
BBB+
BBBBB
BBB+
BB
B+
BBBB+
B+
BBB+
BB+
-
BBB+
A+
Source: Capital IQ, Standard & Poor’s, SEC Filings
10
Specialty Chemicals Quarterly
First Quarter 2015
SPECIALTY CHEMICALS VALUATIONS (Through March 31, 2015)
5-Year Index Performance
KBCM’s Specialty Chemicals Index increased 3.7% for the quarter ended Mar 31st, versus a 0.4% increase in the S&P 500
160%
KBCM Specialty
Chemicals Index
S&P 500
Last 12 Months
1.3%
10.4%
Last 3 Months
3.7%
0.4%
Last 1 Month
0.9%
(1.7%)
140%
120%
100%
133.8%
80%
76.8%
60%
40%
20%
0%
(20%)
(40%)
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
5-Year Enterprise Value / LTM EBITDA Valuations
KBCM Specialty Chemicals Index valuations increased to 11.6x EV / LTM EBITDA as of March 31st
12.0x
10.0x
Average: 8.8x
8.0x
6.0x
4.0x
2.0x
0.0x
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Source: Capital IQ, SEC Filings
Note: KBCM Specialty Chemicals Index includes: ALB, ASH, AVD, AXLL, AXTA, BCPC, CBT, CE, CHMT, CLMT, CYT, EMN, FMC, FOE, FUL, GRA, HUN,
HXL, IFF, IOSP, IPHS, KOP, KRA, KWR, MTX, NEU, OEC, OLN, OMG, OMN, POL, PPG, RPM, SCL, SHLM, SHW, SIAL, SXT, VAL, WLK, ZEP
11
Specialty Chemicals Quarterly
First Quarter 2015
SELECT KEYBANC CAPITAL MARKETS TRANSACTION EXPERIENCE
Announced
Announced
Announced
a portfolio company of
January 2015
January 2015
a portfolio company of
a portfolio company of
has acquired
has been acquired by
Investment Partners
has been acquired by
has been acquired by
$1,100,000,000
€350,000,000
Senior Notes
$692,000,000
Transaction Value
$800,000,000
Transaction Value
Buy-Side Advisor
Buy-Side Advisor
Sell-Side Advisor
Co-Manager
Sell-Side Advisor
December 2014
December 2014
October 2014
October 2014
September 2014
Polymer Additives Division
has acquired
has acquired
has been acquired by
$112,000,000
Transaction Value
$555,000,000
Senior Secured Credit Facilities
$430,000,000
Senior Secured Credit Facilities
$450,000,000
Senior Unsecured Credit Facilities
$1,000,000,000
Senior Notes
Joint Lead Arranger &
Joint Bookrunner
Joint Lead Arranger &
Joint Bookrunner
Joint Lead Arranger &
Joint Bookrunner
Co-Manager
July 2014
February 2014
$154,000,000
Transaction Value
Sell-Side Advisor
August 2014
August 2014
August 2014
a portfolio company of
a portfolio company of
has acquired
has been acquired by
has been acquired by
has been acquired by
and
$855,000,000
Senior Secured Credit Facilities
$1,050,000,000
Transaction Value
$351,000,000
Initial Public Offering
$392,000,000
Transaction Value
Joint Lead Arranger,
Joint Bookrunner &
Co-Syndication Agent
Sell-Side Advisor
Sell-Side Advisor
Co-Manager
Sell-Side Advisor
SPECIALTY CHEMICALS TEAM CONTACTS
For additional information on KeyBanc Capital Markets’ Specialty Chemicals Practice, please contact any of the individuals listed below
Mario Toukan
Managing Director
Head of Chemicals Practice
216.689.4663
[email protected]
Ben Whiting
Director
Chemicals Practice
216.689.4120
[email protected]
Key Tower, Floor 6
T.J. Monico
Director
Chemicals Practice
216.689.3079
[email protected]
127 Public Square
Alain Harfouche
Vice President
Chemicals Practice
216.689.3995
[email protected]
Cleveland, OH 44114
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