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October 14, 2002 02:00 AM

Investment group to buy Rhein Chemie

Bruce Davis
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    Bayer A.G. will to sell its Rhein Chemie Rheinau GmbH subsidiary for $212 million to Advent International Corp., a Boston-based equity investment firm with extensive chemical industry holdings.

    The sale price includes the assumption of debt, the companies said.

    Advent is one of a dozen investor groups that expressed interest in Rhein Chemie after Bayer put it on the block in December, according to Wolfgang Kober, president of Rhein Chemie Corp., the company's U.S. subsidiary.

    Advent said one of its first priorities will be to expand Rhein Chemie's presence in the Far East, which represents only about 10 percent of the company's global business. The firm is an international supplier of specialties to the rubber, lubricant and plastics industries.

    Rhein Chemie has 1,100 employees and reported 2001 sales of $273 million. The company was profitable, although neither Bayer nor Advent disclosed earnings figures.

    The transaction includes Rhein Chemie affiliates in the U.S. and Japan and a Chinese joint venture in which Rhein Chemie owns a 90-percent interest, as well as a wholly owned subsidiary, iSL-Chemie GmbH & Co. K.G. of Kurten, Germany. The sale should be completed by early November, subject to the approval of the relevant antitrust authorities.

    ``Under this new ownership, Rhein Chemie would have excellent prospects of further expanding its strong market position,'' said Werner Wenning, Bayer management board chairman. In December 2001, Bayer announced its intention to divest Rhein Chemie and other subsidiaries to focus more closely on its core businesses.

    Advent said it normally retains its holding in companies for three to five years before seeking buyers, and this strategy would apply to Rhein Chemie as well.

    ``Advent usually buys companies where they see potential to position the company better in the future,'' Kober said. ``I think they see the potential Rhein Chemie has for growth in all areas of the world. We are in the three major markets in the world for rubber.''

    With more than 50 investments worldwide in the chemical and pharmaceutical industry, Advent has extensive experience in this sector.

    Its investments in European companies include PVC makers Vinnolit GmbH & Co. K.G. and Vestolit GmbH & Co. K.G. in Germany and Inspec Group P.L.C. in Great Britain.

    Founded in 1889, Rhein Chemie has been a subsidiary of Bayer since 1971.

    It operates production facilities in Germany, the U.S., China, Japan and other countries. The Chinese unit, Rhein Chemie (Qingdao), is a joint venture between Rhein Chemie and Red Star Chemical Group Corp. of Qingdao, China.

    Globally, Bayer is both a supplier and customer of Rhein Chemie, and that relationship won't change, Kober said.

    In addition to its own product range of release agents, vulcanization agents and polymer-bound chemicals for the rubber processing industry, Rhein Chemie Corp. distributes Bayer's rubber polymer product and rubber chemical lines in the U.S.

    In an arrangement that started Jan. 1, Rhein Chemie distributes rubber polymers primarily to the eastern U.S., and uses Santa Fe Springs, Calif.-based R.D. Abbott Co. Inc. to cover the remainder from the Rocky Mountain states westward. Bayer has separate distribution agreements in Canada and Mexico, the company said.

    Rhein Chemie Corp. has been a manufacturer in the U.S. since 1987, when it bought Wyrough & Loser Inc. of Trenton, N.J., then an independent supplier of chemical dispersions for the rubber industry. It boosted its North American operations in October 1999 with the purchase of Elastochem Inc., a Chardon, Ohio-based supplier of multiple-ingredient dispersions.

    Bruce Meyer, RPN staff, contributed to this report.

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