Stepan Is On A Global Buying Spree
Jul19

Stepan Is On A Global Buying Spree

Chicagoland surfactants maker Stepan Co. is coming out of the recession with global expansion in mind. This month, the company made two overseas acquisitions. Late last week, Stepan purchased Alfa Systems, which just year finished construction of its plant near Wroclaw, Poland. The facility has 25,000 metric tons of aromatic polyester polyol capacity and downstream polyurethane systems output. The polyols are made from recycled polyethylene terephthalate. Earlier this month, Stepan purchased Peter Cremer’s 100,000-metric-ton-per-year methyl ester plant in Singapore. Stepan has said nothing about the financial terms of either of the deals, not even when they’ll be accretive to earnings. Though Stepan executives will likely give some clues the next time they issue earnings in a couple of weeks. Up to this point, Stepan hasn’t been the most global company in the world. Nearly two thirds of its sales come from within the U.S. Less than 15% come from outside the U.S., U.K., and France. The company does, however, have joint ventures in the Philippines and China. But even though it is largely a regional firm, there are few chemical companies that held up during the recession as well as Stepan has. While its sales declined from $1,600 million in 2008 to $1,276 million in 2009, its earnings increased from $37 million to $63 million. The company has also come out of the recession with nearly $100 million in cash on its balance sheets. Also worth mentioning is that Rhodia recently made a Chinese surfactant acquisition. Update: Stepan is also increasing its stake in its JV in the Philippines from 50% to 89%. In the company's statement, CEO F. Quinn Stepan, Jr. talked up synergies with the the plant it is buying in Singapore. BTW, its partner in the JV has the best name ever, United Coconut Chemicals. If there was ever a Marx Brothers movie about a chemical company run by Groucho, with Harpo and Chico in charge of operations, the name of that company would, without question, be United Coconut...

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Rhodia Exec Outlines Strategy
Jul02

Rhodia Exec Outlines Strategy

The Chemical Notebook recently had a telephone interview with Pascal Juery, president of Rhodia’s Novacare arm, to talk about Rhodia’s acquisition of Feixiang Chemicals. His reasoning wasn’t fancy or convoluted. That is usually a good sign. Another good sign is that the $489 million that Rhodia paid for Feixiang doesn’t seem too steep. The company says the purchase will be accretive from year one, an indication of a reasonable price. Moreover, Rhodia is paying a multiple of 9x EDITDA (earnings before interest, taxes, depreciation, and amortization), which given Feixiang’s record of 20% growth and improving profitability over the past five years, seems like an attractive value for Rhodia. As for the rationale of the acquisition, Juery points to its purchase last year of Chicago-based surfactants maker McIntyre Group. Feixiang makes a similar range of surfactants and is also back integrated into specialty amines. Feixiang, with about $250 million in annual sales, is a bit bigger than McIntyre, which had about $150 million in revenues at the time of the acquisition. Juery says that Feixiang builds on Rhodia’s earlier success with McIntyre. When Rhodia made the acquisition, it had a target of doubling McIntyre’s EBITDA in two years. That goal had been accomplished in less than a year and a half. Obviously, the Feixiang purchase is also about geography. “We are gaining exposure to a dynamic market,” Juery says. About 70% of Feixiang sales are in Asia, mostly in China and SE Asia. And, when you look at its website, you see names of “partners” like Unilever and P&G. Those are the kinds of customers you want to see in a specialty surfactants company. Here another interesting tidbit about Feixiang: While its main plant is in Zhangjiagang, it is building another plant in the south of China that will be ready by the end of this...

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