COVINGTON, Ky.—Lion Copolymer Holdings L.L.C. has reached an agreement to buy Ashland Inc.'s elastomers business for an undisclosed amount, returning Lion Copolymer to the emulsion SBR business less than a year after it closed its SBR factory.
The deal, when finalized, will bring Lion Copolymer the Ashland elastomer factory in Port Neches, Texas, that employs 250. Terms of the sale, expected to close by year's end, were not disclosed.
The elastomers business accounted for about $272 million in sales for the 12 months that ended June 30, according to Ashland. That was 17 percent of the Ashland Performance Materials' $1.6 billion in revenue. The business mainly serves the North American replacement tire market with emulsion SBR, but it also supplies elastomers for flooring, shoe soles, adhesives and sealants, automotive parts and industrial rubber goods.
Ashland acquired the business as part of its purchase of International Specialty Products in August 2011. At the time, the elastomers unit had annual sales of $410 million, according to information in Ashland's fiscal 2013 annual report. That report also said the segment reported a $50 million decline in gross profit from the prior year because of a $20 million inventory charge, along with price increases not being sufficient to cover the rising costs of butadiene.
“This decision fits Ashland's well-established strategy of divesting non-core assets and reinvesting in higher-margin, specialty chemical businesses where we see attractive growth opportunities,” said James J. O'Brien, Ashland chairman and CEO. “We are pleased with the value we received for the business and believe this transaction represents a good strategic fit for Lion.”
Lion Copolymer closed its SBR plant in Baton Rouge, La., last December. The firm sold the operation earlier this year to a group of investors and former managers of the operation, calling the business East West Copolymer & Rubber L.L.C.
Lion Copolymer itself continued to produce EPDM at facilities in Geismar, La.
“With the acquisition of the Ashland elastomers business, we are pleased once again to be in this segment of the synthetic rubber business,” said Jesse Zeringue, president of Lion Copolymer.
“We think the size of the facility in Port Neches, access to feedstock and excellent storage capacity, combined with specialty products, such as hot styrene-butadiene rubber polymers and high styrene polymers, provide us with an excellent growth opportunity. We were also impressed by the quality of the operations at the plant, which has benefited from significant investment over the years.”