DuPont, Trinseo plastics materials units are for sale. Who's interested?

A wide-ranging group of buyers could be attracted to the plastics materials businesses of DuPont Co. and Trinseo.

Both of those businesses have been put up for sale this month. DuPont of Wilmington, Del., is selling businesses with annual sales of just over $4 billion, including its iconic nylon resin unit. Berwyn, Pa.-based Trinseo is selling its styrenics units, including polystyrene resin and feedstocks. Those units had sales of more than $800 million in 2020, although their sales in the first nine months of 2021 already had exceeded $1 billion.

"We're going to have a very good process," Trinseo CEO Frank Bozich said on a conference call with stock analysts. "I think we're going to have three types of buyers—strategics in the same value chain, regional players who want exposure to North American and European styrenics markets and a good number of financial sponsors who are looking to do a roll-up and aggregate assets with high cash-on-cash return.

"I expect us to have a good process with a robust number of participants," he added.

DuPont CEO Ed Breen told analysts that the has already fielded inquiries for the plastics business. He added that he hopes to close a sale of the business by the end of 2022.

Potential buyers for the DuPont plastics unit or similar engineering thermoplastics businesses, according to market veteran Robert Eller, "will likely be large private equity companies who are adept at cost cutting, in contrast to the major chemical companies who would rather spin and pursue more attractive opportunities than cut costs."

Eller, president of consulting firm Robert Eller Associates in Akron, Ohio, added that private equity companies have emerged as buyers of these units because commoditization "drives prices and profitability down, especially for large companies with high overhead and paths out of commodity-world via specialties."

Materials giant Dow Inc. of Midland, Mich., might be interested in both the DuPont and Trinseo units, according to Phil Karig, managing director of Mathelin Bay Associates in St. Louis. Trinseo was formed in 2010 as a spinoff of several Dow businesses. Dow also briefly was merged with DuPont from 2017-19.

Dow's familiarity with both businesses and the value-added nature of the DuPont business might convince the firm to make an offer, Karig added. He also said that PE firms "could bid up prices for most of these assets."

Asian manufacturer Teijin Ltd. also is likely to buy out DuPont's 50-percent share in plastic films maker DuPont Teijin Films, Karig said. DuPont already had tried to sell its stake in that business twice in three years before the recent announcement.

Global assets are included in the businesses being sold. Trinseo's sale includes its 50-percent ownership of leading North American PS maker Americas Styrenics L.L.C. AmSty—based in The Woodlands, Texas—is a joint venture between Trinseo and Chevron Phillips Chemical Co.

AmSty does not report annual sales, but the firm's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for 2020 was $52 million, down 44 percent versus 2019.

Regarding the sale of Trinseo's stake in AmSty, a CP Chem spokesperson told Plastics News that the firm "continually evaluates the best ways to optimize our portfolio of assets. Beyond that, it is not our practice to share details of our business strategy."

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. According to a Trinseo filing, AmSty uses 55 percent of its styrene capacity internally to make PS resin.

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. If Trinseo sells PS and feedstocks, its remaining business units would be latex binders, engineered materials (including acrylic sheet and resins) and base plastics (including ABS and polycarbonate).

Assets included in the DuPont sale are wide-ranging as well. It includes several well-known brands and materials, including Zytel nylon, Crastin polybutylene terephthalate (PBT), Rynite high-performance nylon and filaments, Delrin acetal, Vamac and Hytrel elastomers and Tedlar fluoropolymers.

Tyvek plastic film and Styrofoam expanded PS materials are not included in the sale, a company spokesman said.

"It's important to note that we expect the [sale] process to take several months and conclude by the end of first quarter 2022," he added. "For now, it remains business as usual as we continue to operate our facilities and meet customer needs and our business commitments."

Nylon is a major part of DuPont's history. The firm began commercial production of nylon 6/6 fiber in December 1939, at a newly built plant in Seaford, Del., about 90 miles from company headquarters in Wilmington. DuPont's work on developing nylon was led by Wallace Carothers, a legendary researcher who left the faculty of Harvard University to join DuPont in 1928.

Today, DuPont is a major global producer of specialty chemicals and plastics. The 219-year-old firm posted sales of $20.4 billion in 2020.

DuPont sites involved in the sale include:

• Zytel nylon sites in Richmond, Va.; Hamm, Germany; and Mechelen, Belgium.
• Tedlar fluoropolymer production in Circleville, Ohio.
• Vamac elastomer production in Orange, Texas.
• Delrin acetal production in Parkersburg, W. Va.
• DuPont Teijin film sites in Hopewell, Va.; Torrance, Calif.; and Bayport, Texas.
• Sites compounding several of these materials in Shenzhen and Zhangjiagang, China. The Zhangjiagang site opened in 2020.

On Wall Street, DuPont's per-share stock price began the year around $82 but was near $79.50 in early trading Nov. 18 for a decline of 3 percent. Trinseo's per-share stock price started 2021 around $54.60, then peaked at $74.30 in early March before dropping to $45.40 in mid-August. It had recovered to $54.50 in early trading Nov. 18—roughly where it was at the start of the year.