NY Shop Aims To Double Size Of Additives Carve-Out

Target: Antioxidant and UV stabilizer solutions business of Chemtura Corp.

Sponsor: SK Capital

Seller: Chemtura Corp.

SK Capital announced on Nov. 12 it had agreed to buy the antioxidant and UV stabilizer product business of Chemtura Corp., the publicly traded specialty chemicals company, in a deal valued at $200 million. The company makes additives that are used in plastics and other products used in the packaging, automotive, electronics and industrial sectors.

The firm also wants to support technology the company is developing that would make products that it supports last longer and be more environmentally friendly, Siadat said. Standing alone, the division generates about $500 million in annual revenue. SK Capital is confident that between add-on acquisitions and advances in its technology, the company could double its revenue.

“This could easily be a $1 billion business,” Siadat said.

Established in 2007, SK Capital typically invests $25 million to $100 million in companies in the specialty materials, chemicals and health care sectors. In August 2011, it closed its first institutional fund with $500 million in commitments. After this deal closes, the fund will still have more than 70 percent of the fund left to invest, Siadat said.

SK Capital has made something of a specialty out of carve-outs. Its portfolio includes Aristech Acrylics LLD, a manufacturer of acrylic products it bought in 2008 from Mitsubishi Corp.; Ascend Performance Materials LLC, a producer of nylon resins and fibers it bought in 2009 from Solutia Inc.; and IBA Molecular Imaging, a developer of radioactive isotopes used in medical imaging that it bought in April from Ion Beam Applications SA of Belgium.

The $200 million price tag would consist of about 40 percent equity and 60 percent debt, Siadat said, putting the firm’s equity check at about $80 million. The firm is currently negotiating a term loan and revolver with lenders, Siadat said.