Trinseo (Styron) Drops Its IPO
Jul08

Trinseo (Styron) Drops Its IPO

Trinseo has withdrawn its prospectus for a $400 million initial public offering of stock. Trinseo is the rarely used name for Styron, the former Dow styrenic polymer and polycarbonate unit. Dow sold the unit to the private equity firm Bain Capital for $1.6 billion in 2010. Bain changed the name to Trinseo for some reason and filed for an IPO two years ago. In its letter to the Securities and Exchange Commission, dated June 15 pulling the registration statement, the company would only say that the withdrawal “would be consistent with the public interest and the protection of investors.” I think that just means that no one gets...

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Styron Becoming Trinseo
Apr18

Styron Becoming Trinseo

A few months ago I posted the following about a conversation I had with Styron CEO Chris Pappas at the K Show: “At the same time, he seemed miffed when I asked him at K about the styrene business cycle. He doesn’t want his company pigeonholed as a styrenics company. (I don’t know how I got that impression, considering that the company, along with ChevronPhillips, owns Americas Styrenics, one of the largest polystyrene makers in the world. Oh, and the name of the company is STYRon).” In a move that either shows either my growing influence as a chemical industry thought leader, or that the styrene tag was getting on his nerves (I suspect it is the latter), Styron has changed its name to Trinseo. “The name Styron is strongly tied to the styrenics chain – particularly polystyrene and styrene monomer, which are an important part of our company – but we are much more than that,” Pappas said in the press release. Translation: “The Styron name REALLY got under my skin.” Like most names that seem to have been read from the punch card outputs of random digit generators, we are assured that the name has a very deep and meaningful connection to the company. “Trin” comes from “intrinsic”; “eo” comes from the root of the Latin verb “to go”. We also hear from the consultancy, Landor Associates, which made sure the new name didn’t mean something like “defiling your ancestors” in Cantonese. “We chose Trinseo because it has the word ‘intrinsic’ at its root. For a company that creates materials used inside customer products, it’s absolutely relevant,” said Ken Runkel, executive director in Landor’s New York office. I suppose it would probably be a great name for ALCOA and Weyerhaeuser, too. I really don’t want to make fun. This isn’t a bad name. And even a bad name would be better than Styron. Let’s face it, the name Styron was given to it by Dow, the company that sold the business. It probably wanted nothing more than to amplify to investors the point that it was selling off its old and clunky styrenics...

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Musing On BASF’s Styrenics Following Nova’s Sale
Nov19

Musing On BASF’s Styrenics Following Nova’s Sale

Nova Chemicals revealed in its earnings announcement earlier this week that back on Halloween it had reached an agreement to divest its 50% stake of its Ineos Nova styrene and polystyrene joint venture to its partner. The partners haven’t settled on a price, which is subject to final determinations on debt and other liabilities. Nova’s CEO, Randy Woelfel, did promise a modest amount of cash and reduced liabilities to come out of the deal. Last month at the K show in Düsseldorf, people kept on speculating about the future of BASF styrenics business. That month, Styrolution was carved out of BASF into a €2.5 billion unit that makes styrene, polystyrene, ABS, and other styrenics. People supposed that Styron or Ineos might be interested in the business. Chris Pappas, CEO of Styron since Bain Capital bought it from Dow, is keen on growing his company through acquisition. At the same time, he seemed miffed when I asked him at K about the styrene business cycle. He doesn’t want his company pigeonholed as a styrenics company. (I don’t know how I got that impression, considering that the company, along with ChevronPhillips, owns Americas Styrenics, one of the largest polystyrene makers in the world. Oh, and the name of the company is STYRon). Anyhow, he wouldn’t comment when asked about BASF and I doubt he’s inclined to order up a bigger helping of polystyrene and ABS. He would also need to get ChevronPhillips on board. I wouldn't quite say the same for Ineos and wouldn’t be surprised if it has kicked the tires of the BASF business. The company did, after all, buy BASF’s U.S. polystyrene business back in 2007. Ineos also recently acquired the old Lanxess/Bayer/Monsanto ABS business. Now it is in full possession of the Ineos Nova joint venture. Though, another big deal is a tall order. I’m on the fence about whether either of these firms CAN buy the business for anti-trust reasons. Americas Styrenics and Ineos Nova have big market shares—first and third--in North America, respectively. Globally, the industry is still quite fragmented. It might be doable with divestitures. That said, just because styrene has been down in the dumps for a decade doesn’t mean it can’t come back. Ineos Nova has turned a profit, albeit modest, in the first nine months of the year. Perhaps years of consolidation and plant shut downs are starting to catch up to the industry. There is still a matter of the structural shift. Most of the growth is in consumer durable goods in Asia. The industry in the U.S. and Europe has been more anemic in recent years. BASF might be...

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Crisis Over For Dow
May28

Crisis Over For Dow

Fitch Ratings has raised its outlook on Dow Chemical’s ‘BBB’ credit rating from negative to stable. The change is as incremental as it gets. It merely suggests that the company is no longer in imminent danger of a credit downgrade. But for Dow Chemical, it is a little like the Bulletin of Atomic Scientists shaving a minute off the Doomsday Clock. The company, beaming from the news, forwarded the Fitch press release to me. “Our credit rating remains a solid investment grade,” the company remarked in an e-mail. There is only one wrung lower for an investment grade rating, so the distinction is a bit like the one between Schaefer and Schlitz. Fitch downgraded Dow’s credit rating from ‘BBB+’ to ‘BBB’ back in March, 2009, the same week that Dow hashed out a deal to salvage its acquisition of Rohm and Haas. And the downgrade came three months after the Kuwaiti government scuttled the sale of half of Dow’s commodity chemicals business to Petrochemical Industries Co. of Kuwait to form the K-Dow joint venture. Without the $7.5 billion from the JV formation, the Rohm and Haas purchase put about $10 billion in debt on Dow’s books with few apparent prospects--at the height of the financial crisis--to get financing. In a report issued yesterday, Fitch analyst Sean Sexton said that since last April, Dow has done a good job in handling its debt crisis. It generated $3.4 billion selling Morton Salt, a stake in a Dutch refinery, its share of a Malaysian petrochemical JV, and calcium chloride. I doubt that any of these divestitures were all that painful for Dow. And the company did avoid selling Dow AgroSciences—as CEO Andrew Liveris intimated he might during the crisis. And, Dow didn’t have to sell the K-Dow assets for a song at the bottom of the business cycle. Otherwise, Dow did what a lot of companies did—it raised more debt and issued equity. But Dow did it on a grander scale: $8.75 billion in new debt and $3.25 billion in equity. Fitch is looking forward to Dow raking in another $1.63 billion from the sale of its Styron styrenics and polycarbonate business to Bain Capital. (Word around the campfire is that Bain is paying a very full price for those assets.) The Fitch report came with a couple of warnings, though. “Fitch notes that the leverage is still high for the rating,” Sexton wrote. And, despite cutting its dividend last year, Dow still has relatively weak cash...

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