Momentive Performance Materials has already been active with divestitures. Earlier this month, it sold its ink and adhesives resins business for $120 million to Harima Chemicals Inc, a Japanese company. More divestitures could mean more deal opportunities for buyout shops with the know-how to run specialty chemicals businesses.
Bankers from PrinceRidge said the company would likely put more assets on the market in the coming months, according to two private equity professionals whose firms looked at the ink business. Leland Harrs, a managing director at PrinceRidge who helped market the ink business, did not return calls seeking comment.
Both of the buyout professionals interviewed believe Apollo is trying to get the company in shape in order to exit it, ideally with an IPO. And the firm might want to take the company public as soon as possible to capitalize on a rebound both in IPOs and in the chemicals business. “They’re going to set their timing on how the markets look,” one of the buyout pros said. Apollo, through a spokesperson, declined to comment.
The chemicals market, which suffered after the financial crisis, has benefited from the improving economy. The industry provides materials for everything from steering wheels to plastic packaging for consumer goods and to bind boards used in home construction.
Apollo created the company in October by merging two companies: Momentive Performance Materials Inc., which provides silicone and quartz-based materials to industrial customers, and Hexion, which sells specialty chemicals to the same market. Both struggled after the financial crisis but have since rebounded. Sister news service Reuters reported in September, before the merger closed, that the company would work on integrating its businesses for a quarter or two before Apollo considered an exit.
The merger created a company with 117 production facilities and pro-forma sales of approximately $7.5 billion and EBITDA of $1.24 billion, according to the company.
Apollo could also be looking to divestitures and an IPO as a way to pay off considerable debt on Momentive Performance Materials’s balance sheet. At the time of its merger, the company had more than $6 billion of debt , according to The New York Times.