Polymer additives company Chemtura (Middlebury, CT) has sold its majority interest in processing equipment maker Davis-Standard (Pawcatuck, CT) for $72 million in a management buyout and to a private equity firm, Hamilton Robinson (Stamford, CT). Chemtura is to receive an additional $8 million contingent upon certain undisclosed post-closing determinations. The equipment maker has been on the block for months since Chemtura expressed interest in concentrating only on its core specialty chemical business.
According to Davis-Standard president Charles Buckley the new ownership structure will continue to be led by the existing management team, which he says is not limited to only a few top managers but the company also intends to offer the rewards of ownership to even more managers in the near future. Management will own more than 20% of the common equity, he says.
Davis-Standard, which merged with rival Black Clawson Converting Machinery 18 months ago, saw a turnover of about $250 million for the fiscal year ending September 30, 2006. Buckley says the company will continue expanding its technological leadership position in the future. Chemtura’s CEO Robert Wood says the proceeds from this transaction will be invested in its core businesses and be used to reduce debt.
Despite aggressive actions on multiple fronts to reshape the portfolio and strengthen businesses, our earnings have not yet caught up with our actions. In part, there is a longer than expected lag between volume recapture and margin recovery, Wood says. Chemtura registered sales last year totalling $3.9 billion. [email protected]