2/12/2015

Stepan reaches deal to sell business unit

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By Mike McNulty

NORTHFIELD, Ill.—Stepan Co. has sold its Specialty Polyurethanes Systems business to J6 Polymers L.L.C. in a cash deal to focus on its core operations, polyurethane polyols and surfactants.

The transaction “will allow our Polymer business segment to redeploy resources to further improve growth and innovation in our line of polyols for coatings, adhesives, sealants and elastomers applications,” said F. Quinn Stepan Jr., president and CEO of the Northfield-headquartered company.

While terms of the transaction were not disclosed, Stepan said it expects to report a pretax one-time gain of between $2.5 million and $3 million during the first quarter from the sale proceeds.

Stepan recorded 2014 net sales associated with the specialty polymers business of about $2.8 million, according to Scott D. Beamer, vice president and chief financial officer.

He noted that the specialty business focused on mixing polyols with other products for some customers, but that the majority of customers Stepan supplies with polyols do their own mixing.

Polyurethane polyols continue to be an important part of Stepan's operation, Beamer said, whereas the blending segment for various systems wasn't a core business.

The company is a major supplier of polyurethane polyols used in the growing thermal insulation market and for companies in the coatings, adhesives, sealants and elastomers industries.

It also is a leading producer of surfactants, key ingredients in consumer and industrial cleaning compounds, along with a variety of non-cleaning products.

Stepan has a network of 17 production facilities located in North America, South America, Europe and Asia, Beamer said.

The company has a global work force of about 1,800.

A handful of those plants produce polyols, which are about 25 percent of the company's overall sales.

One of the sites the firm operates in the U.S.—its plant in Millsdale, Ill.—has been producing the specialty polyurethane blends involved in the transaction with J6 Polymers.

During a transition period, the factory will continue to toll produce specialty polyurethane products for J6 Polymers, Beamer said.

A plant was not part of the transaction, he noted. Basically the Specialty Polyurethanes Systems sale included inventory, customer and supplier lists, intellectual property, formulations, manufacturing procedures and all other information required to operate the business, Beamer said.

Stepan has been expanding its polyols and surfactant businesses for the last several years. In 2011, it made two key acquisitions, one in Central Europe and the other in Asia.

It purchased a methyl ester plant in Singapore and has turned it into a global chemical manufacturing hub for the Asia-Pacific region.

The company also acquired a state-of-the-art polyol chemical production facility in Brzeg Dolny, Poland, which will bolster and further build that part of its operation.

In 2013, the company acquired Bayer MaterialScience's North American resins unit, which was integrated into its polymers business.

J6 Polymers, based in Kingston, Ill., could not be reached for comment.