News from The Valence Group Chemicals M&A conference: Chemtura CEO hails divestments, now seeks M&A

Tuesday, 27 October 2015 | Stephen Burns | ICIS Chemical News

NEW YORK (ICIS)–Chemtura’s divestment programme in 2013 and 2014 succeeded in delivering value to shareholders, but the shoe is now on the other foot, Chemtura chairman and CEO Craig Rogerson said on Tuesday.

With its portfolio transformation now complete, Chemtura would be exploring opportunities through acquisitions or mergers, he said.

But the company would not go for “just any deal” and its management must be able to explain to its shareholders why it makes sense for Chemtura to own the asset, Rogerson said at an M&A conference hosted by investment advisors Valence Group.

On the other hand, any further divestments might create “dissynergies” and leave Chemtura too small in scale to perform as a public company, he said.

Chemical company managers and their investment bankers should be mindful of the opportunities presented by unforced divestments, even though these might not be as “sexy” as growth via acquisition, Rogerson said.

Rogerson stressed that the responsibility of company managers is primarily to deliver value to shareholders.

Chemtura’s record on improving its share price as it emerged in 2010 from a Chapter 11 bankruptcy protection was built around three main divestments.

These were an anti-oxidants business sold to SK Capital for $200m in April 2013; a consumer products unit sold to KIK Products for $300m in December 2013; and Chemtura AgroSolutions, which was sold to Platform Specialty Products for $1.0bn in November 2014.

Rogerson acknowledged that the consumer products unit was “sold a year too late” to get the optimum market conditions.

From the proceeds of the sales, $800m has been spent on share repurchases, at an average of $22/share. Chemtura shares closed at $29.89 on the New York Stock Exchange on Tuesday, up 20% since the start of the year.

Chemtura is based in Philadelphia, Pennsylvania. It produces chemicals for use in other petrochemicals, such as additives for synthetic lubricants, hot-cast elastomers and organometallic compounds.